Does being self-employed affect car insurance?

6 minute read Published on Feb 20, 2025 by BrokerLink Communications

A happy person driving a car.

If you're currently self-employed and still own a vehicle, you may have some questions regarding your car insurance coverage and whether your employment status plays a role in how much you'll end up spending. To learn more about self-employed car insurance and rates, stick around for more information!

Does your employment status affect car insurance rates?

The short answer is no. While insurance providers use numerous factors to calculate car insurance costs, being a self-employed individual will not make a difference. That being said, if you use your car for business purposes, you may consider business car insurance.

Essentially, commercial auto insurance will protect your vehicle and any liabilities or car accidents that may happen when you are using your personal vehicle for business. As such, opting for commercial auto insurance rather than personal auto insurance may impact your insurance premiums slightly.

What factors impact car insurance rates

As we mentioned, your insurance provider will use various factors to calculate your insurance rates. While your job title isn't considered in these calculations, here are some factors that are:

Age and driving experience

Younger drivers with less experience behind the wheel tend to pay more for their insurance premiums than others, given that they are considered more of a risk to insure than those with more driving years.

Claims history

The more claims you have on your record, the more of a risk you'll be to insure. As such, you can anticipate having higher premiums than someone who has no claims, infringements, or fines on their record.

Where you live

Where you reside in Canada also plays a role. Those living in big cities with high crime rates and more traffic ultimately increase their chance of filing a claim. As such, insurers will factor this in when calculating your costs.

The policies and coverages you choose

In Canada, certain car insurance policies are mandatory, while others are optional. Opting for additional coverage and higher coverage limits will cost more than getting basic insurance.

Driving habits

If you drive long distances and more frequently, you may also experience higher rates. This is because the more time you spend behind the wheel and the farther you travel, the more likely you are to be in a car accident.

Is self-employed car insurance more expensive than personal car insurance?

If you purchase commercial auto insurance as a self-employed person, there is a chance your insurance rates will cost a bit more. However, if you choose to purchase personal auto insurance and do not use your vehicle for business purposes, your employment will not be factored into your policy costs.

Do I need to tell my insurance provider that I am self-employed?

Generally speaking, self-employed people should notify their insurance provider that they are self-employed. While your status as an employee won't impact your costs, it can help your provider customize your insurance policy to meet your unique needs.

Do I need business car insurance if I'm self-employed?

If you are self-employed and only occasionally drive your own vehicle for work, commercial insurance won't be necessary. However, self-employed drivers who use their car for personal usage and business purposes and have additional drivers using their car should consider commercial auto insurance as this type of insurance policy will protect your employees who use your vehicle as well.

Self-employed car insurance and business policies you need

Starting your first business is an exciting and daunting experience. To ensure your interests and finances are protected against various risks, there are multiple auto insurance policies you can customize to your unique needs and business operations. Here's a closer look at the different types of auto insurance and business insurance you may want to consider:

Business Insurance

We will discuss the various types of business insurance below:

Car insurance

We will explore the different types of car insurance options below:

Keep in mind that whether you're purchasing car insurance for your personal vehicle or commercial auto insurance, certain policies and coverage minimums are mandated by law, depending on the province or territory you reside and conduct business. As such, before working with your insurance provider for your expired car insurance renewal, make sure you understand the minimum coverage requirements.

Does commercial auto insurance cover non-business use accidents?

Personal automobile insurance is for individual use of a vehicle, whilst commercial auto insurance is for business usage of a vehicle. One will not compensate you for the other. As a result, if you use your automobile for both personal and professional purposes, you must either acquire two different car insurance policies or add business car insurance as an addition to your existing personal car insurance policy. Failing to do so could mean that if you were involved in an automobile accident while driving your own vehicle for business, your insurance provider would not cover you. When getting insurance, make sure to inform your provider about what you use your vehicle for so you can get the right coverage moving forward.

How to get cheaper car insurance

The next time you're renewing car insurance and want to save money on your coverage, here are some tips and tricks you can use to secure affordable coverage:

Bundle your insurance policies

If you're in the market for more than one type of insurance, consider bundling your policies with the same insurer. Most insurance providers offer discounts to those who bundle their coverage and have more than one type of policy with them as a way of saying thank you for your business.

Ask about insurance discounts

Did you know there are several types of discounts available to clients that many insurers offer? Whether it be for being a long-time client, installing safety devices on your car, having a claim-free driving record, or being a member of a professional organization, there are numerous promotions and discounts you may qualify for! So, make sure to ask your insurer about eligibility when buying your coverage.

Shop around and compare quotes

If you live in a province that has a private insurance system, shopping around and comparing insurance quotes is one of the best ways to secure the best deal for your coverage. Most insurers use a different calculating system to determine premiums. Therefore, by shopping around, you'll be able to find car insurance that meets your needs and budget.

Pay for your car insurance upfront

If you're able to comfortably do so, you may also want to consider paying for your car insurance upfront rather than monthly. Insurers typically add a monthly administration fee to those who pay over the year to cover the costs of processing your payments. Therefore, by paying upfront, you can avoid these additional costs and save a bit of money.

Is car insurance tax deductible?

Yes, self-employed drivers are able to claim their car insurance on their taxes to increase their tax return per tax year. Ultimately, if you use your car for business errands, you can claim a portion of your auto insurance as a business expense. For example, if someone uses their personal vehicles 30% of the time for business reasons, and the other 70% for personal use, only the portion used for commercial use, which in this case is 30% can be deducted from your income tax.

What other business expenses can I deduct from my taxes?

Beyond car insurance, there are other self-employed car expenses a self-employed individual can deduct from their taxes. This includes their car depreciation, parking fees, tolls, tires, oil, gas, vehicle repairs, licenses and registration, and electricity costs if you drive an electric vehicle. Additionally, if the vehicle used is not owned, self-employed people can deduct a portion of the leasing fees from their taxes.

How do you calculate self-employed business expenses?

To deduct your business expenses from your taxes during tax time, you'll first need to calculate the total cost of your expenses for that year. With this final total, you'll want to determine what percentage of your expenses came from business use. With this percentage calculated, you'll be able to record these car expenses on your taxes under Schedule C. If you are unsure how to proceed with filing your taxes as a self-employed person, we suggest working with an accountant, as they will be able to walk you through the processes required. That way, you don't risk filing your taxes incorrectly.

Get car insurance with BrokerLink today

Whether you have questions about how many claims per year there are in Canada, want to learn more about getting a rental during repairs for your own car, or want to purchase an insurance policy, BrokerLink has got you covered.

You can contact us over the phone or make an appointment at one of our many locations across Canada! Alternatively, if you're browsing for coverage, don't hesitate to use our free online quote tool for competitive insurance quotes from some of Canada's top insurance companies!

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