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.

Types of business car insurance

When shopping around and comparing business car insurance, there are several options to choose from. Here are some of the things you’ll need to think about:

  • Vehicle replacement – this pays out the difference between the value of the car and the cost of a brand new one.
  • Return to invoice – for cars bought from a dealer within three months, this covers the difference between the car’s value and the price you paid when you bought it.
  • Return to value – this covers the difference between the car’s value when written off and the value when you took out the policy.
  • GAP insurance – this pays the difference between the car’s value and the outstanding balance on your car finance agreement.

Car insurance for taxi drivers

If you use your car as a taxi driver, you’ll need specialist taxi insurance. Taxi insurance is usually more expensive than other types of business car insurance, because you’re doing more mileage and are driving with many more passengers. There’s also a difference between being a private hire taxi (pre-book only) versus a public hire taxi (one you can hail in the street). Make sure you’ve got the right type of cover.

Courier insurance

If you’re using your car as part of a courier service, you’ll need a specialist type of car insurance. This is because you’ll need to insure you, the car, but also the ‘goods in transit’ i.e. the stuff you’re delivering or hauling. There’s also a difference between courier delivery and haulage delivery, so make sure you get the right cover for your self-employed work.

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.

What do our customers say?

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Saved £160 an stayed with same Provider
Britpart • 09/09/2021
I got a great price for my car insurance, I would definitely recommend to friend
JTHOM • 09/09/2021
So easy and fast. Got a great deal half of what my current insurers quoted.
Jak60 • 09/09/2021
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Carol G • 02/11/2021
Author image Dan Hutson

What our expert says...

“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.”

- Dan Hutson, Motor insurance expert

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.