How to Save Money on Car Insurance When You're Self-Employed

Finding car insurance for business owners who use their car for work can be confusing. You want to have the right coverage but not at the expense of additional or higher premimums. So what are your options when shopping for the best insurance with the most savings?

First, you have to consider your business and how it’s conducted because that will be a significant factor in whether or not your rates will change.

For example, if becoming self-employed means you are no longer commuting to work, your premium will go down. That’s because insurance companies base auto rates on the number of miles you drive each year. The more miles you drive, the higher the chances you will get into an accident.

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Conversely, if you were previously on an employer-sponsored group auto insurance policy as a benefit of employment, you can expect a rate increase when you switch to a non-group policy since group coverage distributes risk across a large number of drivers.

If your business requires you to drive to meet clients, transport goods, or spend lots of time on the road, you may want to consider commercial insurance. Unlike commercial insurance, personal car insurance generally does not provide sufficient liability and comprehensive insurance needed to protect your business.

For example, if you are involved in an accident while you are driving for work, and it is determined to be your fault, the other party can go after you and your business.

The same applies to your spouse, children, or other family members who drive your vehicle to help out with the business. While your premiums may be higher with a commercial policy, you might save a lot of money, eliminate hassle, and prevent possibly losing your business in the long run.

Saving money through tax benefits

Fortunately, an increased cost of car insurance (rate increase) can be mitigated by tax savings. That’s because the money you pay for insurance on a car for your business is a deductible business expense. This can offset business revenue and reduce your total income tax liability. Other deductible expenses include gas, oil changes, repairs, registration fees, lease payments, depreciation, tools, and parking.

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Keeping a detailed log of miles traveled can also help you save money. With an accurate log of miles and vehicle maintenance, you can maximize the tax benefits of being self-employed.  An accurate driving journal can also assist in lowering car insurance premiums.

Commercial auto insurance discounts

Self-employed drivers paying for commercial auto insurance can benefit from a variety of insurance discounts. According to DMV.org, here are some of the common types of discounts business owners can take advantage of:

Business Owner’s Insurance Discount — You may be able to get a bundling discount if your insurance company provides business owner’s insurance and you purchase both types of insurance through the same company. 

Multi-policy Discount — Insurance companies that provide many types of insurance coverage often provide discounts to customers who purchase multiple policies from them.

Paid-in-Full Discount — If you pay your entire premium upfront rather than spreading out payments over the course of a year, you may qualify for a discount off your premium. 

Commercial Business Experience Discount — Unique to commercial auto insurance, insurance companies sometimes provide a discount for business longevity. 

Prior Insurance Discount — Customer that stay with an insurance company for a year or more are eligible for discounts to encourage customer retention.   

Commercial Driver’s License Discount — To ensure that vehicles under the commercial auto insurance policy are driven by properly licensed drivers, this discount is offered to mitigate high risk vehicles and conditions.

Additional ways to save on car insurance premiums

Improve your credit score — According to research firm Conning & Co., 92 percent of all insurance companies use credit information when underwriting new policies.

Request citations be removed from your record — Since your driving record is an indicator of how likely you are to get into an accident, the fewer moving violations and speeding tickets you have on your record, the less risky you are to your insurance company.

Take a defensive driving class — As studies show that defensive drivers tend to be involved in far fewer accidents than aggressive drivers, taking a defensive driving class increases the chance that you will drive more cautiously.

Don’t delay

Whether you’ve owned your business for several years or you are newly self-employed, it’s never too late to save money on your car insurance.  With so many car insurance options to choose from, you’re bound to find ways to save money — as long as you are willing to do the math.