Self-Employed? What You Need to Know About Auto Insurance
With today’s virtual workforce blurring geographical boundaries, you may find that your business is less reliant on transportation than in the past. However, if you or your staff use vehicles to conduct business, automobile insurance is a necessary line item in your operating budget.
Car insurance also may be an area in which you can realize cost savings. As with any expense, you must do due diligence in order to justify your expenditure.
One factor that obviously will impact your insurance premiums is how much driving you do. As your mileage increases, so can your premiums.
Don’t assume that, simply because you’re self-employed, your insurance rates will go up. Insurance companies determine rates by algorithm, based on your risk of needing to file a claim, not your employment status.
However, if you’re self-employed you won’t enjoy the group discounts offered to large corporations. You’re not completely alone; professional and alumni organizations can offer similar discounts. The National Association for the Self-Employed (NASE), for example, has memberships that offer discounts including home and auto insurance.
Such deals are referred to as affinity-based policies. Geico, The Hartford, Liberty Mutual, MetLife and Nationwide are among the auto insurance companies that offer these. Affinity partners can range from educational collaboratives to fraternities and sororities, military organizations, and recreational groups.
Before you begin seeking quotes on auto insurance policies, you should know exactly what type of coverage you really need.
If you maintain a personal car insurance policy, you’ll want to compare personal auto insurance costs. Keep in mind that, running a small business, a personal auto insurance policy may suffice to meet your business needs. Note that a personal policy only covers specific types of vehicle use, registered in an individual’s name.
It’s important to realize that any time you use your personal car for business-related purposes, and you get into an accident, your business could be liable for damages. Because personal insurance policies often are limited in what they will cover when the car is driven for work purposes, you may want to invest a little more in a commercial policy.
What’s more, the other party involved in the accident has the right to sue your business to recover any damages not covered by your personal insurance policy. When you drive your personal car on a business errand, you place both your business and personal assets on the line. Is that a risk you’re willing to take?
If you’re like many of those who are self-employed, you also may end up driving the company car for personal use. To ensure full coverage, you may need a commercial or company car policy. If you own a vehicle that is considered a commercial use and gross vehicle weight, you’ll need a commercial policy.
It’s a good idea to keep track of your daily mileage, noting which miles are business-related and which are personal. Yes, it’s a tedious task, but there are apps for that! If you use your car more for business purposes than personal ones, you should consider a commercial automobile insurance policy.
So when exactly do you need a commercial auto insurance policy? Basically, if you transport products or people, if your vehicle has special work-related equipment, or if you lease or rent vehicles to others, you’ll need a commercial policy. Keep in mind that if you transport individuals or high-value items your premiums will likely be more expensive.
In that case, your coverage would be under your self-employment business, not your own name, even when you use the company car for personal use. The policy would also cover employees who use the car for business purposes. Don’t forget to compare commercial auto insurance costs as well.
If your business owns a fleet of vehicles, that places you in a different insurance category altogether. Obviously, you’ll want to hire drivers with good driving records. Another way to keep a lid on costs is to periodically review the number and types of claims made against your policy. If your vehicles have technology such as collision warning and rear-facing cameras, you may get a break on premiums. You also may be able to reduce your premiums by adding certain equipment to your vehicles or providing additional training for your drivers. And, of course, you should take additional steps to prevent vehicle theft.
Don’t forget business write-offs. Although car insurance may cost you more because you’re self-employed, you can take advantage of tax savings. Auto insurance and related deductible business expenses can include gasoline, car maintenance and repairs.
Whether your car insurance is a personal policy or a commercial one, don’t settle for the status quo. You’re likely to find ways to reduce your costs, and then you can reinvest those savings right back into your business.