7 Ways Being Self-Employed Affects Your Car Insurance

Self-employment numbers are rising all over the world with territories like the U.K. seeing over 25% growth in this sector over the last 20 years.

Why is being self-employed so popular? Because it affords people the freedom that they need to be able to explore their creativity. It also allows them to make their own breaks.

If you’re thinking about becoming a self-employed individual, there are some considerations that you’ll want to mull over before taking the leap. One of those considerations is how being self-employed could affect your car insurance.

Below, our team of business experts breaks down everything that you need to know about the cause and effect relationship between car insurance and being your own boss.

1. You Won’t Quality For Position-Based Savings

Many car insurance companies offer a variety of profession-based incentives to drivers. These incentives include large annual discounts on their policy premiums and other interesting perks like accident forgiveness.

Positions like military, police, and teachers are usually the biggest winners of these policies. People that are self employed, though, are the parties that get most excluded.

You read that right. Many insurers see self-employed people as being the equivalent to unemployed when they look at policy incentives.

While we hope that perception changes in time, today, it’ll make it so your insurance premiums will likely be slightly higher.

2. Insurance Write-offs Could Be Possible

If you use your vehicle for business purposes, you may be able to make up for your slightly higher premiums by writing off your car insurance.

As with all things related to taxes, you’ll want to talk to a qualified accountant before taking action on this front. In our opinion though, if a car is necessary to the operation of your business, you should have no problem getting credit for your insurance expenditures come tax time.

3. Commercial Insurance Options Are Available

There’s a whole other class of insurance called “commercial insurance” that’s available exclusively for business owners. Commercial insurance provides additional coverage from both a property and liability standpoint since people may try to sue your company if you get in a car accident while running business errands.

Usually, there’s no cost advantage to opting into commercial insurance versus non-commercial. You never know though when there might be a promotion going on and when there is, you may be able to enjoy some special incentives.

4. Sometimes Insurers Will Offer Special Self-Employed Deals

Did you know that as a rideshare professional, you’re self-employed? Given that fact, many insurers try to cash in on the rideshare market by offering special promotions targeted specifically at self-employed people.

These promotions are admittedly few and far between. They do happen though and when they do, you could end up actually saving money on your insurance by being self-employed.

5. You May Want to Consider Alternative Pay Schedules

Most people pay for their insurance policy on a per-month basis. While that makes sense given that those payments are smaller and are less committal, as a self-employed individual, you may want to opt for a different pay schedule.

Why is that?

Because more committal payment plans lead to more savings and more savings is important if your insurer is charging you more for being self-employed. Many people can save up to $100 per year by choosing to opt into annual coverage or $50 per year by paying their insurance in semi-annual chunks.

See what you can save by experimenting with alternative payment schedules and decide whether or not bulk payments make sense.

If you’re wondering if you can cancel your insurance mid-policy if you pay in bulk, know that this common question is one that’s asked by many self-employed individuals and the answer varies. Your best bet is to ask your particular insurance provider over the phone that question to see if they have any early cancellation fees.

6. A Phone Call to Your Insurer May Be Necessary

Love the convenience of buying your insurance over the internet? So do we.

Being self-employed though, you may need to talk to your insurance provider over the phone and describe your situation.

Many self-employed people opt into non-commercial insurance because online prompts don’t ask them the right questions. Because of that, when those people get into accidents, they may find that their claims get denied because they were conducting commercial business in a non-commercially insured vehicle.

To ensure that you don’t end up falling on hard times due to a technicality, you may want to call your insurer to make sure that you’re opting into the right policy.

7. Mileage Deductions May Offset All Additional Costs

Try not to get depressed if all of this being self-employed discrimination has you down when it comes to auto insurance. Many self-employed individuals track their miles and deduct them on their tax returns come April.

Those deductions often result is huge write-offs that far outweigh any additional expenditures that insurers impose.

Wrapping Up

The key takeaway here is that being self-employed will likely cost you more when it comes to car insurance. That additional amount is typically nominal. With the help of an accountant, you’ll likely be able to find a way to more than offset any premium charges.

By John Pearson

John is a serial entrepreneur and writer who is passionate about helping small businesses launch and grow. His work has been featured in Huffington Post, Entrepreneur, and Forbes.