How does being self-employed affect car insurance rates?

Most car insurance companies offer car insurance coverage for self-employed drivers, and it's unlikely self-employed car insurance rates will go up unless your job requires a lot of travel. Enter your ZIP code below to compare self-employed auto insurance quotes and find affordable policies from top-rated companies in your area.

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Tonya Sisler has a Bachelor’s Degree from the University of South Carolina in Journalism and has worked for 15+ years in management. She has also completed a proofreading certification and is currently a professional writer.

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Brad Larson has been in the insurance industry for more than a dozen years. He started out as a claims adjuster for a national carrier. He has since switched to the agency side of the business. Brad is licensed in all P&C lines.

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Reviewed by Brad Larsen
Licensed Auto Insurance Agent

UPDATED: Nov 17, 2020

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Car insurance rates are determined by a number of factors including your driving record, where you live, the type of vehicle insured and more. It’s natural for car insurance companies to ask about your employment details and a title of self-employment alone doesn’t automatically raise the red flag for higher car insurance rates. It will however open the door to questions about what you do for a living and how the vehicle will be used. The answers to these questions can often influence car insurance rates much greater than just a title of being self-employed.

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Why are some forms of self-employment considered high risk to car insurance companies? Since the cost of car insurance is based on risk using typical assumptions for the use of a vehicle when a person is self-employed its critical for a car insurance company to understand how the vehicle is being used.

What are some high risk factors for self-employed drivers?

For those who work at home and rarely see daylight there really isn’t much higher risk for a car insurance company to insure you. In fact, you are probably one of the lowest risk drivers due to your inability to stop playing Angry Birds and leave your home. However if your self-employment means travelling long distances, transporting company products and allowing employees to randomly use your vehicle then you certainly do pose a higher risk.

Should you tell your car insurance company you are self-employed?

People will try anything to get lower rates but lying to a car insurance company is something you should never do as it’s a fail proof way to have car insurance claims denied, coverage cancelled and possibly even be indicted of insurance fraud. Most car insurance companies offer car insurance coverage to self-employed people and its very rare to have the cost of car insurance go up substantially simply due to being self-employed. You do however need to be honest with yourself and consider whether or not the policy coverage of a typical car insurance policy is sufficient for your needs or whether or not you need to consider some form of commercial car insurance.

Is car insurance more expensive for Self Employed Drivers?

Not necessarily but it depends on what you do and how the car will be used. Millions of people are self-employed and still have very affordable and competitive car insurance rates, sometimes even lower than typical “employed” individuals.

When should you consider Commercial Car Insurance?

Hopefully at some point your business will grow and (depending on the type of business) you may find yourself using your personal vehicle more and more for company related activities. Whenever this starts happening you need to inquire about what type of activity and use is insured under a typical car insurance policy and consider whether or not your needs require more sufficient coverage which may just be in the form of a commercial car insurance policy. Much like many growing decisions of any small business only you can know when its time to upgrade to commercial car insurance.

Can someone sue my business in a car accident?

Yes – you always need to consider personal liability in a car accident as a self-employed individual. This is extremely important and a situation far too few self-employed people actually understand. If you get in a car accident while operating the vehicle as part of your job your business assets can be also exposed to litigation. It’s critical you consider this as a car insurance policy only provides limited protection and does not prevent anybody from suing your company. There are many forms of small business insurance so it’s wise to learn all about insurance coverage for small business well before operating your vehicle for the job.

Who has the cheapest car insurance rates for Small Business Owners?

This all depends on your unique needs. While most car insurance companies offer car insurance to self-employed people there is no company who has the cheapest car insurance rates by matter of title. Your auto insurance rates will depend on your unique needs, the type of vehicle, your driving record and more. What is important however is that you fully understand how car insurance works as a small business owner and define how much and what type of car insurance you need. When you have this list ready then the best way to find the cheapest car insurance rates is to shop around and compare car insurance companies. We can help, simply enter your ZIP code above to find local car insurance companies and compare rates.

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