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Does Being Self Employed Raise or Lower Car Insurance Rates?

There are a lot of people these days that are living in the United States and have started their own small businesses. As there are more layoffs resulting from the recession, lots of people aren’t even trying to find work anymore – instead they turn to becoming self-employed. There are many advantages and disadvantages involved with running your own business. One of the most common questions that people running their own businesses have is: “Does being self-employed raise or lower car insurance rates?”

How being self-employed affects car insurance rates

The fact is that based on hearing that someone is “self-employed” there is no way of knowing whether their business will affect their rates without taking a look at the business itself. What type of business operation is being run? Does it involve a lot of traveling via road vehicles? If so, all of those vehicles are going to need insurance. Companies that ship a lot of things like FedEx and UPS tend to purchase what’s known as fleet car insurance – or coverage for the entire stock of their vehicles.

A lot of people that are self-employed have a specific vehicle that they use for their business that can be used as a tax write off. This vehicle needs to have insurance – but the cost to insure your business car will come down to the same risk profile that companies look at for non-businesses. However, they will want to know whether you log a lot of miles driving your business vehicle so that they can offer you a trustworthy rate.

Why your insurance costs might increase if self-employed…

Logging a lot of travel miles

There are a few reasons that your insurance premiums might actually increase if you are self-employed. The main reason I already mentioned – if you log a lot of miles in your business vehicle. People that do a lot of driving have a greater chance of getting into an accident and insurance companies will raise their rates accordingly. Many self-employed individuals use their business cars often for trips, errands, and meetings. The more you use your car, the greater your insurance premiums will be.

Shipping expensive items

There are many businesses run by self-employed individuals that involve making shipments. Anytime shipments are involved, there is a chance that while shipping supplies there is an accident. If all of the merchandise being shipped is ruined, it needs to be insured. Obviously items being shipped would require special coverage options on a policy though. You would need to speak with your insurer to discuss the details.

Targeted for theft

Additionally, your self-employed operation could be a target for theft. Anytime someone gets wind of you running a business and lets the wrong person know, they may try to steal your supplies. This is extremely common with semi-drivers getting held up and robbed for their supplies in bigger cities. The company shipping the supplies needs to make sure that they have all of their merchandise insured so that if something crazy like an armed robbery occurs, the company gets everything paid for by their insurance.

Could you get lower car insurance rates if you’re self-employed?

Although getting car insurance for businesses can sometimes be associated with a steep increase in premiums, there are cases where a self-employed individual actually gets lower than average prices on their insurance. Generally, the people that get better insurance deals running their own business are people who don’t do much driving because they run a home-based business.

Anytime a business involves minimal car travel or none at all, your insurance rates will go down. Some people may choose to not even drive a car and go without insurance. Just realize that if you are self-employed and occasionally drive, you will still need insurance. However, if you work from home, you may be able to work out a very low price on your coverage. Most insurance companies will want you to let them know how many miles you drive each day so that they can give you a proper quote.

Always tell your provider that you are self-employed

If you haven’t already told your insurance company that you run your own business and/or are using vehicles for business purposes – even if you are self-employed – they may not be liable to insure you in certain situations. If they can prove that you were running business errands and are self-employed but get into an accident, they may not be responsible for providing coverage if you didn’t inform them of your business trips. It is imperative that you work out the details with your insurance agent before you start using your vehicle for business ventures if you’re officially self-employed.

Do yourself a favor and enter your zip code above at the top of the page to compare quotes from the leading companies in the insurance industry. They will help you get the best possible rate for you as a self-employed individual and will let you know whether you should upgrade your policy because of your business status!

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