Self-employed car insurance

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Does being self-employed affect car insurance?

Yes, if you’re self-employed and drive for work, this will affect the type of car insurance you need – and your premium.

When you apply for car insurance, providers will need to know how you use your car so they can work out your risk level and calculate your quote.

The more time you spend on the road, the greater your risk of having an accident and needing to make a claim. And if you claim without the right insurance in place, you won’t be covered.

How much does car insurance cost for the self-employed?

Comprehensive car insurance typically costs less than

£651²

a year if you're self-employed

Employed drivers typically pay less than £590². But your quotes will depend on various factors, including:

The industry you’re in
The car you drive for work
Your age and claims history
Where you live
Your annual mileage.

² Based on 51% of customers who compared quotes for this type of policy in September 2026.

What type of car insurance do I need if I’m self-employed?

This depends on how you use your car. If you’re self-employed but don’t drive for work purposes at all, you can stick with regular car insurance.

If you use your car to commute to one place of work and make no other work-related trips, you can get regular car insurance, but you’ll need to choose cover for commuting.

But if you regularly drive for work purposes, such as seeing clients or attending conferences or meetings, you’ll need car insurance that covers business use.

You’ll also need to make sure any employees driving their own vehicles for work are covered for business use.

Classes of business car insurance

There are three classes of business car insurance. All include social, domestic, pleasure and commuting (SDPC), covering your car for personal use alongside work journeys.

Class 1

Class 1 can cover you if you drive between different places of work or occasionally drive to meetings.

Class 2

Class 2 includes everything Class 1 does, plus a named driver – typically someone you employ.

Class 3

Class 3 is for people who travel a lot for work, such as sales professionals who drive to multiple locations.

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Bear in mind

Business car insurance isn’t a separate type of policy. It’s simply the class of use you need to declare on your car insurance if you drive for work.

What does car insurance for self-employed people cover?

Typically covered

Travelling between different work locations or offices
Regularly visiting clients or customers
Driving colleagues or other employees around on business duties
Driving to the bank or post office on work-related errands
Getting to training, conferences or exhibitions.

Not typically covered

Paid passenger or delivery work, such as taxi driving or courier jobs
Tools, equipment or stock in your car, which tool insurance may cover
Drivers who aren’t named on your policy, such as employees using your car.

Did you know?

If you’re a courier (e.g. delivering parcels or food), you’ll need Carriage of Goods car insurance, also known as hire and reward. If you're a cab driver, you’ll need taxi insurance.

Cover levels for self-employed drivers

When you compare car insurance for self-employed drivers, you’ll choose a level of cover as well as how you use your car for work.

Third-party Only (TPO)

This is the minimum level of cover needed to drive on UK roads. It can cover you for damage to other people’s cars and property but won’t pay out for damage to your own vehicle.

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Third party, fire and theft (TPFT)

Designed to cover your car if it’s stolen or damaged by fire, as well as damage to other people’s cars and property.

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Comprehensive

Usually includes everything that third-party, fire and theft insurance covers, along with accidental damage to your own car.

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Is car insurance tax deductible for self-employed people?

If you use your car for work, you could get tax relief on the business portion of your car expenses. Car insurance counts as a ‘running cost’ of your vehicle, along with petrol, parking fees, servicing and repair costs.

If you claim your actual running costs, you can include it as an allowable business expense on your self-assessment tax return.

What car expenses can I claim as self-employed?

You should be able to claim allowable business car expenses for:

Motor insurance
Repairs and servicing
Fuel
Parking
Hire charges
Vehicle licence fees
Breakdown cover.

You may also be able to get tax relief for part of the cost of buying a vehicle by claiming capital allowances – as long as you’re not using simplified expenses.

What you can’t do is claim for normal commuting or domestic driving to get a car insurance tax deduction.

How to calculate your self-employed car expenses

If you use your vehicle for personal and business reasons, you can only claim expenses on your tax return for the costs associated with your business.

There are a couple of ways to do this:

1. Use a flat rate for mileage, known as simplified expenses. It's currently 55p per mile for the first 10,000 business miles and 25p per mile thereafter.

2. Work out how much you actually spend to use your car for work and claim back the exact cost.

The simplified expenses checker can help you find out which option is best for you.

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How to save on car insurance for self-employed drivers

Choose the right class of use

Think carefully about how you use your car. For example, choosing business class 2 when you actually need class 1 could make your cover more expensive.

But you want to make sure you’re not underinsured either.

Calculate your business mileage accurately

If you use the same car for work and personal driving, take the time to work out your business mileage.

Being accurate will help give you a more realistic quote and ensure you don’t pay more than you need to.

Consider increasing your voluntary excess

Voluntary excess is how much you agree to pay towards a claim.

While upping it could lower your premium, make sure you can afford your chosen as well as the compulsory excess if you make a claim.

Our data shows that you could save around £241 by increasing your excess from £0 to £100².

Pay for your insurance in one go

Although paying monthly can help spread the cost, you’ll likely be charged interest on the instalments, meaning you pay more in the long run.

To give you an idea of the price difference, you might pay £505 in one go, and around £748 over the year if you pay monthly².

Shop around and compare quotes

We could help you find great-value self-employed car insurance. Just provide us with a few simple details, and we'll get you quotes in minutes.

People who compare car insurance with us could save up to £566³.

Read more tips on cutting the cost of your car insurance.

What our expert says...

“It’s important to keep in mind that not all self-employed people need business car insurance. It’s usually only necessary if you drive between places for work purposes. Regular car insurance should be just fine if your car is purely for personal use.”

Amy Rootham, Insurance expert

What do I need to get a self-employed car insurance quote?

You just need you to provide a few details to get your quotes.

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Your car and how you use it

Your driving history

Additional drivers

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FAQs

Is self-employed car insurance more expensive than standard car insurance?

Yes, car insurance for self-employed drivers can be more expensive. This is because:

You may drive at busy times, which could increase your risk of having an accident
Leaving your car in different locations could pose a higher risk of theft or damage
You could be carrying expensive tools or equipment, which could mean a bigger payout for the insurer if you make a claim.

The price of your insurance also depends on what you do for a living.

Do I need to tell my insurance provider I’m self-employed?

Yes, you’ll need to tell your insurance provider to make sure you have the correct cover.

If you’ve become self-employed and your insurer doesn’t know, there’s a good chance your policy will be invalidated if you need to make a claim.

Always be upfront and honest.

What if my job changes after taking out self-employed car insurance?

Tell your insurance provider about any changes to your job. This applies whether you’ve had a complete career change or you’ve gone back to being employed.

Insurance providers take your job title into account because some professions are considered higher risk than others, so your premium could change if your job has.

What if I am both employed and self-employed?

If you’re part-time self-employed and you drive for business purposes, you’ll need business car insurance. The class of business use you’ll need depends on the self-employed work you do and how often you travel.

All business classes of use include social, domestic, pleasure and commuting (SDPC), covering you when you drive outside of your self-employed work. So you don’t need a separate policy for that.

But if you commute to your employed job and do your self-employed work entirely from home with no business driving involved, standard cover is likely enough.

Tell your insurance provider about both jobs. How you use your car for each one can change the cover you need.

Not sure? Check with your provider. Our guide to classes of use and how your job affects your premium can help.

Should I take out GAP insurance if I’m self-employed?

There’s no obligation to buy Guaranteed Asset Protection (GAP) insurance, but it could be a useful addition to your self-employed car insurance.

GAP insurance covers the shortfall between the car’s market value and the outstanding balance on your car finance agreement. When you’re trying to build your business up, the last thing you want is to get into more debt, so it’s certainly worth considering.

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Reviewed 23 Oct 2026 byAmy RoothamInsurance expert

Amy helps make comparing insurance simpler and clearer. Thanks to more than four years’ experience at Compare the Market, she understands what people look for, working closely with insurance providers to offer you deals and services that are fair, easy to understand and right for your needs.

Methodology

¹Based on Trustpilot ratings (October 2026).

²Based on 51% of customers who compared quotes for this type of policy in September 2026.

³Based on Online independent research by Consumer Intelligence during September 2026, 51% of customers could achieve this saving on their car insurance through Compare the Market.