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Car insurance for the self-employed

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Compare car insurance for the self-employed 

Read on to understand how you can insure your vehicle when you work for yourself and how car insurance could be a tax deductible expense. 

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

If you’re self-employed and your car is just for personal use – like visiting friends or going to the shops – regular car insurance will cover you. If you use your car to commute to work, you may need to add cover for commuting.

But if you use your car for work purposes, for example if you’re a care worker who drives to visit patients, you’ll need to have business car insurance. Also, you’ll need to make sure any employees driving their own vehicles for work are covered for business use.

There are three classes of business car insurance:

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

Class 2 can include a named driver – usually, this has to be someone you employ

Class 3 is for people who travel a lot for work.

If you’re delivering commercial merchandise or driving a private taxi, you’ll need a different kind of insurance.

Frequently asked questions

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

It can be. Business car insurance is often more expensive, because insurance providers consider business drivers to be at a greater risk of having accidents – and making claims.

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?

You’ll need to tell your insurance provider you’re self-employed to make sure you get the right cover for your needs.

If you don’t notify your insurance provider and you need to make a claim on your car insurance in the future, there’s a good chance your policy will be invalidated, if it comes to light you’ve been using your car for business purposes. It always pays to be upfront and honest.

Is car insurance tax-deductible for self-employed people?

Yes, if you use your car for work. Car insurance is counted as a ‘running cost’ of your vehicle, along with petrol, parking fees, servicing and repair costs, so you can claim it as an allowable business expense. You can’t, however, claim the cost of buying a vehicle.

Can I cut the cost of my car insurance if I’m self-employed?

Whether you’re self-employed or not, there are a few tips for getting cheaper car insurance.

Consider increasing your  voluntary excess. While this can help cut the cost of your premium, make sure you can afford to pay both the voluntary excess and compulsory excess if you want to make a claim.

Reduce your annual mileage. If you can cut down on the amount of driving you do, you could reduce the cost of your car insurance.

Consider a telematics policy and you could be rewarded with lower premiums for driving safely.

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

If you’re self-employed, you could achieve a premium of £794^^ for your car insurance.

^^Average premium of £794.01 based on the average P1-5 prices (5 cheapest prices) for enquiries with a clickthrough. Based on Compare the Market data for 1 March 2020 to 1 June 2020.

What do I need to get a quote?

To help you compare quotes for car insurance for the self-employed, we’ll need you to give us a few details about:

  • Your car. We’ll need to know your registration number, as well as the make and model.
  • How you use your car and how many miles you drive a year, on average.
  • Your no-claims discount. Tell us how many years you have.
  • Your driving history. Please tell us if you’ve been involved in an accident, if you’ve any driving convictions, or if you’ve made a claim on your car insurance in the past.
  • Additional drivers. Let us know if there are any additional drivers that you’d like added to your policy.

Dan Hutson

From the Motor team

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

Why use Compare the Market? 

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95.9% of customers found our car insurance experience ‘easy’ or ‘very easy’***

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**On average it can take less than 5 minutes  to complete a car insurance quote through Compare the Market, based on data in May 2020.

***For the period 1st March to 31st May 2020, 4,938 people responded to the question “When completing a quote using CtM, how did you find it?”  4,734 responded with ‘easy’ or ‘very easy’ (95.9%).

****For the period 1st March to 31st May 2020, 4,938 people responded to the statement “I think the prices provided by CtM are….” 4,604 responded with ‘competitive’ or ‘very competitive’ (93.2%).

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