Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer

UPDATED: Jul 14, 2021

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In a nutshell...

  • Self-employment poses some unique challenges when locating services
  • Self-employment status does not affect premium rates in most cases
  • The most important factors are your driving record and your level of risk
  • Shop and compare policies to find the one that is best for you

Many companies offer special rates for employees of government or political jobs and other positions. Military people (both active and retired) often get a discount on car insurance due to their status. But what about self-employed people?

If you are an independent business owner, you may want to know how insurance companies assess your insurance rates.

Being an entrepreneur or small business owner often leaves you looking for ways to take care of yourself since you have no “benefits package” or other bonuses.

One way most people can save on car insurance is to compare rates. Enter your zip code above to see how much you could save on your auto insurance.

Companies for Self-Employed People

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Many companies do offer some help for self-employed individuals. For example, Geico Insurance, which once focused on only government employees, now allows you to get car insurance from their company no matter what type of job you have.

You just simply check the “self-employed” status in the drop down menu when you sign up for a free quote.

Other companies such as State Farm also allow you to get insurance with their company if you are self-employed with no penalties or other fees.

In the past, some car insurance agencies may have looked at self-employment as something that might put them at risk for paying your premiums if you had trouble with your business.

But now, there are so many people with their businesses that it has become more commonplace. Also, insurance companies know that being self-employed is potentially much more lucrative than being employed elsewhere.

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Does it matter how much money I make?

You may be asked to disclose how much money you make in a year but many companies do not require this information.

They mainly use this information more for categorization of your job status rather than any particular reason that would affect your rates.

As long as you pay your bill each month on time, they do not care what you do for a living.

How Statistics Determine Premiums

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Insurance companies use all kinds of statistics to determine what premium rates they should charge people for their car insurance. But generally, the type of career that they have is not usually considered an important factor.

The factors that insurance companies take into consideration deal more with risk, not income. However, they do consider credit history as a factor in determining rates for premiums.

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Insurance for Self-Employed Individuals

If you are self-employed and looking for insurance that caters to this category, you may find some companies that offer discounts, but this is rare. You may be eligible for other insurance discounts, however.

Most discounts are available for other reasons, some of which are listed below.

  • Low mileage discount  Low mileage discounts are discounts that you may get when you only travel a certain distance within a given year. You may qualify for this discount if you meet the low mileage requirements.
  • Safe driver discount – Safe driver discounts are available for people who have a good driving record. This is usually based on the criteria of no traffic violations or accidents for three years or more. This may vary with different policies so be sure to check around to find out how to qualify.
  • Good student discount  If you are a graduate student or have returned to school while running your business, you may qualify for a good student discount. This is usually determined by having a “B” average or better.
  • Military discount  Military personnel often qualify for discounts whether you are retired or active so be sure to ask if your representative does not mention it.
  • Teacher discount  If you are a teacher (even online as a self-employed business owner), you might qualify for this discount. Not every company offers it so be sure to ask when you get your free quotes and compare companies.
  • Automatic payment discount  If you pay your bill through an automatic draft, you may qualify for a small discount. This ensures the insurance company that they will be paid each month promptly and they don’t have to worry about collecting premiums.

To choose an insurance policy for yourself or your family as a self-employed business owner, think about how much you drive in a year, consider the risk factors like distance and whether you should take out extra optional coverage like comprehensive insurance.

Then match what you need with a company that suits you best.

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Factors that Affect Your Rates

If you are self-employed and are concerned about factors that affect your rates, remember that being self-employed is not one of the factors that matter. The most influential factors that affect your rates with your premiums are:

Driving record

Your driving record is the top factor that most influences your rates. This record is because it is the best predictor of how you will drive in the future.

If people have been careless on the road, they may be careless again.

If they had a previous DUI, they might get another one in the future. While people can change, the best predictor of the future is the present, and most insurance companies go by this rule.

Age and marital status

Your age is a big factor in determining your rates simply because people in certain age brackets have more serious accidents.

For example, those in the age range of 18-24 have more serious collisions and severe accidents, so they cost the insurance companies more money than older people (age 65+).

This statistic is partly because seniors have less severe accidents and they often do not drive as far in distance as younger people.

 Credit report

Your credit report is one factor insurance companies take into consideration. They want to know if they can trust you to pay your bill. What they really want to know is whether you will stay on the policy.

They prefer to insure people who stay on the policy for a year or more at a time to decrease their risk of loss.

Shop and Compare

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The only way to find the best policy for you as a self-employed person is to shop around until you find the best policy for your needs. Use our comparison tool below to get a free quote.

Remember it about more than cost. It’s about the assurance you’ll get that you and your car are taken care of on the road.