Commercial Auto Insurance
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Car insurance for the self-employed and independent contractors

If you’re self-employed or an independent contractor, your personal car insurance might not cover you in a work-related accident.

Do independent contractors need commercial auto insurance?

If you have a business vehicle, then you need commercial auto insurance.

Every state requires this coverage for vehicles that are registered to a business, or the ability to compensate someone in case of an auto accident. In the event of an accident, your commercial auto policy would cover the legal bills, medical expenses, and property damage.

For the self-employed and independent contractors, your personal auto insurance might not cover you when you drive your own vehicle for business use. If you drive your personal vehicle for work, you should consider hired and non-owned auto insurance (HNOA) to make sure you're protected.

Each state has its own laws requiring minimum amounts of bodily injury liability and property damage liability coverage for both personal and commercial vehicles. States also carry their own penalties for not carrying auto insurance.

For example, drivers without auto insurance in California can face a fine of more than $350, have their vehicle impounded, and potentially see an increase in auto insurance rates.

What is the difference between commercial and personal auto insurance?

View video transcript.

There are a few key differences between commercial and personal auto coverage.

When your business owns the vehicle, then you need commercial auto insurance. It'll cover you, your employees, and even personal errands.

With personal auto insurance, it's perfect for the morning commute, but won't cover accidents on the clock.

When it comes to pricing, a commercial auto insurance premium can cost up to 150 dollars per month, depending on the industry you work within and your coverage needs.

Are you self-employed? There are auto policy options for you too.

Click the link below to find the right auto policy for your business.

What type of car insurance covers personal vehicles used for work?

If you use a personal, leased, or rented vehicle for work, a hired and non-owned auto insurance policy can offer similar protection to your personal auto insurance.

HNOA offers liability protection for the self-employed, independent contractors, and small business owners when they use their own car or a leased or rented vehicle for work. It covers you during work-related errands, such as making deliveries, picking up supplies, or visiting clients. If you get into an accident, it'll pay your legal costs, along with any judgments or settlements.

This policy doesn’t cover accidents that occur while you’re commuting or running personal errands. It also doesn't cover physical damage to your vehicle.

Which self-employed professionals need commercial auto insurance?

Any independent contractor or self-employed professional who has a vehicle owned by their business or registered to their business needs to carry commercial auto insurance. This coverage is particularly important in professions where driving is a key part of conducting business, such as:

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How much does commercial auto insurance cost?

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Commercial auto insurance costs an average of $147 per month. Your premium is based on a number of factors, including:

  • Number of vehicles
  • Vehicle type and value
  • Level of risk involved
  • Claims history
  • Your driving record
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Are business car insurance premiums tax deductible?

Small business owners can typically deduct their company car insurance premiums as a business expense that’s deducted from your taxable income, if the policies serve a business purpose. A tax professional can help you determine which types of insurance premiums you can deduct on your tax return.

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Why personal car insurance may not cover business use
Insurance companies view business drivers as bigger risks than personal drivers. That's why you may need auto insurance that specifically covers driving for work purposes.

What other kinds of business insurance do self-employed people need?

While commercial auto insurance and HNOA coverage make sense for independent contractors who drive for work, there are other small business insurance policies you might consider.

General liability insurance

If a client is injured at your workplace, it could result in an expensive lawsuit. If you operate your business out of your home, it’s unlikely that your renter’s or homeowner’s insurance would cover this.

General liability insurance gives you financial protection from such third-party accidents.

Commercial property insurance

Commercial property insurance offers financial protection for your workspace and its contents, and is often required by landlords to sign a lease. If you own or rent a workspace, or if you have expensive equipment, inventory, and other business assets, commercial property insurance would help pay for the repair or replacement if your business property is stolen, damaged, or destroyed.

Business owner's policy

If you intend to buy both general liability and commercial property coverage, you can reduce your insurance costs by bundling them into a business owner’s policy (BOP). It combines both coverages under one policy, and usually has lower insurance premiums than buying each policy separately from the insurance company.

Errors and omissions insurance

Errors and omissions insurance, also known as E&O or professional liability insurance, can offset the cost of a lawsuit if a dissatisfied client sues you over your work. Those who offer professional advice and services buy this coverage in case a client accuses them of making a mistake, missing a deadline, or failing to deliver on a contract.

Workers' compensation insurance

Workers' compensation covers medical costs and lost wages from work-related injuries and illnesses. It’s required in most states for businesses that have employees. Some independent contractors are required to have this coverage to work in riskier professions, such as roofing and building trades.

People who are self-employed and don’t have any employees generally aren’t required to have workers’ comp insurance, but it's still a good idea to carry coverage. Health insurance can deny claims for work-related injuries, which means you could end up facing medical bills and lost income while unable to earn a living.

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Compare quotes from top-rated U.S. insurance providers with Insureon’s free online application. Find insurance quotes for self-employed individuals, speak with an insurance agent, and check premiums for commercial auto insurance and other policies that protect your business. You can even get a certificate of insurance the same day.

Updated: February 21, 2024
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