Does Being Self Employed Affect Car Insurance?

When you are self-employed you are your own boss and that may sound great. However, it also means that you need to make sure you are paid well and insured properly. You will need to sort out health, business and vehicle insurance and avoid a catastrophic business failure due to an unforeseen but insurable event. Essentially, self employed car insurance may require a bit more consideration as to how much your private auto is required in your day to day self-employment.

Car Insurance for Self Employed

Insuring your automobiles can be tricky when you are self-employed and you don’t know when your private life finishes and when your business takes over. A few self-employed people own only one car. Even if you have two separate vehicles it isn’t like a hat that you can take one off and put the other.

There may be times you go for business errands in your private car. Then, you need to be careful because your business may be sued separately if you ever cause an accident with your private automobile. You may think nothing of giving a lift to your customers or employees in your private automobile. However, your business may suffer the consequences if you have an accident and they decide to sue your business.

Also, you need to think about what happens if you are injured in a car accident and you cannot work for a while. Usually, self-employed people don’t get paid if they don’t work and therefore you may need to add Personal Injury Protection coverage to your policy to make sure you are paid loss of earnings in case of injuries.

How Does Being Self Employed Affect Car Insurance?

Technically you are unlikely to pay more or less for auto insurance if you are a self-employed driver. It shouldn’t affect your rates directly but it may affect indirectly. Jobs that qualify you for auto insurance discounts are usually well defined. Out of those professions your employment status hardly make any difference to how much you need to pay to insure your personal car.

Being self-employed shouldn’t directly influence auto insurance premiums if a private car is only used for commuting to work like everybody else.

Nevertheless, what you do can influence your car insurance rates indirectly by increasing or reducing the miles you drive and type of coverage you need. If you are working from home most of the time you may not need to drive much and can get cheap auto insurance for low mileage. On the other hand, you may have to pay a bit more if your business requires you to drive long distances.

If your personal automobile is integral part of your employment you should let your insurer know the position. There is a high chance your private policy can be adjusted to cover current vehicle use, depending on what you do and where you live.  

For example, your personal auto insurance may cover jobs like pizza delivery in some states and not others. The best thing to do is to disclose the activities to your insurer or agent and see what they say. At the end, you may end up paying a little bit more to include business use within a private automobile insurance policy. But that would be the right thing to do and make sure that you won’t have problems when you have a claim. And so be it if you have to get a commercial vehicle insurance.

Commercial vs Personal Auto Insurance

Large numbers of self-employed people don’t need an automobile for their business and a few cannot carry out their trade in a private car anyway. For example, you need a van or a truck to carry out labor intensive trades and they usually need separate business insurance. And it is irrelevant for automobile insurance purposes that you are self-employed if you are carrying out your trade from an office like an accountant. You commute to work like everybody else.

As mentioned above, it may be tricky to separate private use from business use. You may need to buy business car insurance instead of a private one in the following situations.

  1. You use your car for business purposes more often than private use. Then, you need to be honest with your insurer and seek business auto insurance. What is important is the use of the vehicle rather than its registration details. It may be registered to your name but its business use cannot be ignored and more important.
  2. If your car is registered to your business it is best to buy commercial vehicle insurance for it.
  3. If the automobile carries your business logo it may be better to have business policy or have a business use cover on your private auto insurance. Remember that people can sue your business if they can demonstrate a link between the vehicle and your business.
  4. You should have a business policy if your employees often drive the vehicle.
  5. If you often carry merchandise relating to your business, make deliveries or carry customers you probably need commercial vehicle insurance.
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