Car Insurance for Self-Employed People (2024)
Identifying the right coverage level for your business vehicle is important; you’ll need to have the correct coverage in the event of a claim.
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Written byNick Dauk
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6+ years writing about insurance, travel, and personal finances
Contributor to brands like Credible
In addition to insurance, Nick specializes in writing about business, entrepreneurship, personal finance, and travel. He’s been featured in myriad web publications, including Fox Business.
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Edited byChris Schafer
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15+ years in content creation
7+ years in business and financial services content
Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.
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Data reviewed byKonstantin Halachev
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7+ years experience in data analysis
Ph.D. in Computational Biology
Konstantin has led data teams across multiple industries, including insurance, travel, and biology. He’s led Insurify’s engineering team for more than three years.
Updated November 20, 2024
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Table of contents
When you’re self-employed, you quickly learn it’s the way you work, not your job title, that affects your car insurance rates. There’s a big difference between a self-owned vehicle used for business and a commercial vehicle designated for business only. It affects your rates because how you use the vehicle may warrant additional coverage.
The good news is that if you’re self-employed, you may qualify for incentives like low-mileage discounts to help offset the business costs associated with your vehicle. Here’s what you need to consider when securing car insurance as a self-employed person.
Quick Facts
Rideshare drivers usually need rideshare insurance.
Business insurance is often tax-deductible.
Many personal insurance policies don’t cover claims resulting from business use.
Cheapest car insurance rates for self-employed drivers
On average, self-employed drivers don’t pay more for car insurance than other drivers. Unless you opt for business car insurance, the cost is about the same.
Business car insurance is another option, but it tends to be pricier because insurance companies see those drivers as being at a higher risk of getting into car accidents and filing claims because they drive more.
The below rates are estimated rates current as of: Friday, November 1 at 12:00 PM PDT.
Data reviewed by Konstantin Halachev
7+ years experience in data analysis
Ph.D. in Computational Biology
Konstantin has led data teams across multiple industries, including insurance, travel, and biology. He’s led Insurify’s engineering team for more than three years.
Insurance Company ▲▼ | Average Monthly Quote: Full Coverage ▲▼ |
|---|---|
| COUNTRY Financial | $38 |
| NJM | $53 |
| Auto-Owners | $73 |
| Erie | $93 |
| Mile Auto | $95 |
| USAA | $99 |
| Root | $103 |
| Metromile | $113 |
| GEICO | $119 |
| State Farm | $119 |
| CSAA | $128 |
| Allstate | $133 |
| Anchor | $137 |
| Safeco | $143 |
| Progressive | $152 |
| American Family | $161 |
| Mercury | $162 |
| National General | $171 |
| The Hartford | $171 |
| Nationwide | $182 |
| Clearcover | $183 |
| Direct Auto | $187 |
| Travelers | $191 |
| State Auto | $198 |
| Elephant | $200 |
| Shelter | $210 |
| The General | $231 |
| Chubb | $232 |
| Dairyland | $236 |
| 21st Century | $238 |
| Farmers | $241 |
| Bristol West | $255 |
| Infinity | $255 |
| Liberty Mutual | $258 |
| Foremost | $266 |
| AssuranceAmerica | $271 |
| GAINSCO | $279 |
| Amica | $279 |
| Commonwealth Casualty | $293 |
Disclaimer: Table data sourced from real-time quotes from Insurify's 50-plus partner insurance providers and quote estimates from Quadrant Information Services. Actual quotes may vary based on the policy buyer's unique driver profile.
Is car insurance tax-deductible for self-employed drivers?
As a self-employed person, you can deduct certain business-related vehicle expenses, including car insurance.[1] You can use Schedule C (Form 1040) and the actual expenses method of calculating your tax deduction. This method factors in car insurance, gas, oil, vehicle repairs, and other costs attributable to only the portion of the business miles driven.
Keep in mind that if your vehicle is a personal vehicle, you can deduct only the expenses incurred during business use. If you use the vehicle strictly for business purposes, then you may be able to deduct the entire cost of owning and operating the vehicle within tax code limits.
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Do you need commercial car insurance?
Commercial auto insurance isn’t the same as a personal auto insurance policy. Your personal insurer won’t cover certain medical expenses, property damage, and other costs resulting from a car accident if it occurred when the vehicle was used for commercial purposes.
Commercial car insurance, also referred to as business auto insurance, is different from a personal policy because it covers vehicles primarily used for commercial purposes. While some personal policies cover limited business-related purposes, like running a quick work errand, these policies rarely provide the extent of coverage business owners and employees need on the road.
State laws typically require at least a general liability insurance policy for bodily injury and property damage.[2] Your insurance agent can help you determine if you need commercial insurance by helping you answer these questions:
Who owns, leases, or rents the car?
Who drives the car, including employees and independent contractors?
How are the cars used in the business, including what and who they transport?
Will employees use their personal vehicles for business purposes?
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Guide to Car Insurance for Leased Cars
Why self-employed drivers might need more than standard coverage
Commercial car insurance is well-suited for companies with fleet vehicles and businesses that rely on transporting goods and services. But self-employed drivers shouldn’t assume that they need only standard car insurance coverage.
Self-employed drivers face unique circumstances because their job responsibilities are so varied. Whether it’s driving extra miles from client to client or having a higher risk of damage or vehicle theft based on the area in which they work, self-employed drivers may need additional business coverage on their personal policy.
Using personal vehicles for business use
If you’re self-employed and work at home but occasionally drive to meetings, you may not have adequate coverage if you cause an accident. If the victim decides to sue you as a driver and, subsequently, your business, you may need more than general liability coverage. Most personal policies, including personal umbrella policies, won’t cover both you and your business in the event of a lawsuit.
Having more robust coverage, like a business auto policy, can protect you in these situations.
Increased mileage
Whether you use your work vehicle directly as an income source, such as driving for Uber or Lyft, or if you frequently travel for business reasons, you may need additional auto insurance coverage to compensate for the extra mileage. This is because insurers see driving more miles as increasing the potential for a claim and increase your auto insurance premium accordingly.
The good news is that mileage put on your own vehicle for self-employment purposes is usually deductible on your tax return.
Higher risk of damage and theft
Most insurers recommend purchasing coverage beyond a liability-only policy; this is especially helpful to consider if your vehicle use goes beyond personal usage. Comprehensive and collision insurance, for example, can cover damages resulting from vandalism, inclement weather, fender benders, and even theft.
Every time you drive increases your chances of filing a claim. If you drive in an area that puts your vehicle or passengers at a higher risk of damage, injury, or theft, a customized full-coverage policy can help protect you from uncontrollable events.
Cheapest recent rates
Drivers using Insurify have found quotes as cheap as $37/mo for liability only and $40/mo for full coverage.
*Quotes generated for Insurify users within the last 10 days. Last updated on November 20, 2024
Rates shown are real-time Insurify user quotes from 100+ insurance companies and Quadrant Information Services data. Insurify’s algorithm excludes anomalous quotes and anonymizes personal details, then displays refined quotes by price, date, and insurer popularity up to 10 days ago from November 20, 2024. Actual quotes may vary based on the policy buyer’s unique driver profile.
*Quotes generated for Insurify users within the last 10 days. Last updated on November 20, 2024
Rates shown are real-time Insurify user quotes from 100+ insurance companies and Quadrant Information Services data. Insurify’s algorithm excludes anomalous quotes and anonymizes personal details, then displays refined quotes by price, date, and insurer popularity up to 10 days ago from November 20, 2024. Actual quotes may vary based on the policy buyer’s unique driver profile.
How to get cheaper car insurance if you’re self-employed
Here are a few tips that self-employed people like you can use to lower your auto insurance rates:
If you work from a home office, look for low-mileage discounts. Many insurance companies have programs for low-mileage drivers, like pay-per-mile programs. Ask your insurance agent which program is the best option for your unique needs.
If you’re a rideshare driver, look for the cheapest insurance company that bundles personal and rideshare coverage. Employment as a rideshare driver often requires special TNC coverage in addition to your regular insurance policy. Compare prices from multiple insurance agencies to see which offers the most affordable combined policy.
If you have employees driving your vehicles, make sure they have good driving records. A person’s driving record heavily affects policy rates. Make sure you let only a driver with a responsible record behind the wheel of your business vehicle.
If you can afford it, anticipate paying your car insurance premiums in full. Some insurance companies extend a discount to policyholders who pay their premiums in full at the start of the term.
If you have a business car insurance policy but rarely drive your vehicle for business use, consider increasing your deductible. When you increase your deductible, you take on more financial responsibility when filing a claim. Some insurance companies will lower your premiums to reward a higher deductible.
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Self-employed car insurance FAQs
It’s important to understand how self-employed car insurance is defined, especially when it comes to how you plan on using the vehicle. This could be helpful if you want to deduct any related expenses from your taxes. If you still have questions, the answers below can help.
Can you deduct your car insurance on your taxes if you’re self-employed?
Yes, you can use Schedule C (Form 1040) to deduct self-employed car expenses. If you only use your car for business purposes, the IRS allows deductions for the cost of ownership and operation. If you use it for personal transportation as well, you can only deduct the cost of its business use. It’s a good idea to work with a qualified tax professional to answer any questions you have about business expenses and tax deductions.
What’s the difference between business use and commercial use?
The main difference between business use and commercial use is typically how the vehicle is used and who owns the vehicle. Business use is often a personal vehicle that’s used occasionally for professional purposes, while commercial use tends to be when a vehicle is used primarily for employment purposes.
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Sources
- IRS. "Topic no. 510, Business use of car."
- Insurance Information Institute. "Insuring Your Business: Small Business Owners' Guide to Insurance."
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Nick Dauk
Nick Dauk is a freelance writer specializing in business, entrepreneurship, personal finance, and travel. His work has been featured in Fox Business, BBC, The Edge, Business Insider, and Bisnow. Nick is a first-generation college graduate, having majored in Interdisciplinary Studies at the University of Central Florida. His eclectic coursework, combined with previous managerial roles in the retail and broadcast television industries, have helped him develop an interdisciplinary approach to writing.
For nearly a decade, Nick has created content for mom-and-pop businesses and global corporations. As a travel writer, his global adventures have also been featured on Inside Hook, Houston Chronicle, Culture Trip, and Matador. When he's not traveling, Nick can be found in Orlando spending time with his wife and toddler.
15+ years in content creation
7+ years in business and financial services content
Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.
Featured in
7+ years experience in data analysis
Ph.D. in Computational Biology
Konstantin has led data teams across multiple industries, including insurance, travel, and biology. He’s led Insurify’s engineering team for more than three years.
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