Self-employed car insurance

If you’re self-employed and drive a vehicle as part of your job, this will affect the type of motor insurance you need – for example, business car insurance.

When you apply for car insurance, providers will want to know what you use your car for – personal use, commuting or for business purposes. This is so they can work out your premiums based on the level of risk you pose.

The more time you spend on the road, the greater risk there is of you having an accident and needing to make a claim.

As well as your normal day-to-day driving activities, business car insurance could cover you if you use your car to:

• Travel between different work locations or offices

• Regularly visit clients or customers

• Drive colleagues or other employees around on business duties

• Drive to the bank or post office on work-related errands

• Use your car to get to training, conferences or exhibitions.

If you use your car for work, you could get tax relief on your self-employed car expenses. 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 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 in order to get a car insurance tax deduction.

If you use your car as a taxi service, you’ll need specialist taxi insurance. The cost of taxi insurance depends on several factors, including your age, type and size of car you drive, annual mileage and the area in which you drive.

You can typically expect to pay around £2,159 a year³.

If you drive a taxi that must be pre-booked, for example, a minicab or you drive for Uber, you’ll need private hire insurance. If your taxi can be hailed on the street or joined from a taxi rank, you’ll need public hire insurance.

If you’re using your car or van as a courier service, you’ll need a specialist type of vehicle insurance that covers you, your car or van and the ‘goods in transit’ – in other words, what you’re delivering.

There’s also a difference between courier delivery and haulage delivery, so make sure you get the right cover for your self-employed work.