Being self-employed doesn’t affect your car insurance rates on its own, but what you do for a living can. The amount of time you spend in your car, who drives it and what you carry in your car can all factor into your insurance premiums.
You could leave your business exposed to lawsuits by relying on your personal auto policy to cover your vehicle for business use.
How does being self-employed affect the cost of my car insurance?
Car insurance companies take the following factors into consideration when setting your rates:
How often you drive for work. If you work from home, you could pay less than someone who puts in daily miles to and from work or has to drive daily errands or deliveries.
How far you drive. A self-employed driver who only commutes to and from a nearby coworking space will pay less than someone who consistently drives long distances.
Transporting people. If your work requires that you drive clients or other passengers around, you could see your rates increase.
Transporting cargo. Transporting expensive inventory can cause your insurance rates to rise.
How can I save on self-employed car insurance?
While being self-employed doesn’t typically come with its own set of driver discounts, here are some ways to save:
Track your miles. Log your miles and keep your personal and work trips separate. Being able to show you don’t often use your car for business could help lower your rates.
Find tax write-offs. Tracked miles, maintenance and insurance could be deducted from your yearly taxes. Be sure to keep a running percentage of how much you used your car for business.
Don’t mix personal and business. If you drive your car almost exclusively for work, you might have a small personal mileage allowance. That allowance can be as low as 10%, and you could lose your business tax incentives if you use it up. Check laws in your state to maximize your tax savings.
Compare car insurance for self-employed drivers
What kind of coverage should I get as a self-employed driver?
If you work from home and don’t use your car much for business purposes, your personal insurance policy is probably fine. But if you mostly use your car for business, or if you have employees who also use it for business, consider buying a commercial insurance policy to help protect you from lawsuits.
It may cost extra, but you may find several discounts based on the policy you choose and the insurance company you work with.
Bundling discount. If you purchase multiple insurance policies for your business from the same company, for example both a business owners and commercial auto policy, you may be able to bundle them together for a discount.
Commercial business experience discount. Having a business that’s been open for three years or more can often reduce your insurance premiums.
Commercial driver’s license (CDL) discount. If a vehicle you’re insuring requires a CDL to operate it, having a valid CDL could qualify you for a discount.
Loyalty discount. If you’ve kept your policy with the same insurer for over a year, you can likely request this discount.
Paid-in-full discount. If you pay your entire policy for the year up front instead of monthly, you can often discount your premium.
You send your assistant in your car to the next town over to pick up inventory, and they get in an accident on the way back. The car is totaled and the inventory is tossed into the road.
Your commercial auto policy covers the claim and damages. If you’d been relying on a personal policy, your coverage might have been minimal or denied, and your inventory definitely wouldn’t have been covered.
What should I watch out for when buying insurance as a self-employed driver?
Liability is the number one concern for self-employed drivers. Some personal policies may limit what they cover if you’re driving your vehicle for business purposes. And your liability in an accident may extend to your business, meaning a third-party may be able to sue your business for damages not covered by your personal insurance policy.
The type of insurance you need as a self-employed driver all depends on how you use your car related to business. You may think your personal policy is enough, but be sure to go over your coverage with an insurance agent to make sure you’re protected. And always shop multiple car insurance companies to make sure you’re getting the best deal for you.
Frequently asked questions about self-employed car insurance
Yes. Your occupation is one of the factors that goes into building your premium. Failing to notify your insurance of a job change could invalidate your coverage, especially if your car gets damaged while you are driving for your new business.
Yes. Depending on how often and how you use your car for business, you can choose to use the standard mileage deduction, or the actual car expenses deduction.
A personal policy is cheaper, but the expense of a commercial policy can be offset by business discounts and tax write-offs.
Heather Petty is a personal finance writer at Finder specializing in home loans, banking and insurance. After falling victim to a disreputable mortgage broker when buying her first home, she’s on a mission to help readers avoid similar experiences when managing their own finances. A self-proclaimed word nerd, her writing has been featured on MSN, Credit.com and MediaFeed.org, among others. Heather previously worked as a technical writer and editor for the casino systems industry and is an internationally published young adult mystery author. She holds a bachelor’s degree in English with a minor in journalism from the University of Nevada, Reno.
How likely would you be to recommend finder to a friend or colleague?
Very UnlikelyExtremely Likely
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.