Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: May 13, 2020

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Here's what you need to know...

  • Out of 60 classifications ranked from cheapest to most expensive, self-employment car insurance rates came in at number 48
  • Stress and high mileage are two key factors that need to be considered by the insurance company when determining rates for the self employed
  • Personal and business use of a vehicle is a catch-22 for both the insurance company and the self-employed individual

Think about the last time you shopped around for a car insurance policy. Do you remember being asked about your occupation? Truth be known, what you and I do for a living does factor into how much we pay for our car insurance.

While your occupation is just one of many factors, it is a factor nonetheless. Insurance agents know that there are certain personality traits and job-related factors that will influence how well we perform behind the wheel, and they rate us accordingly.

In a recent survey that ranked 60 common job classifications, self-employed individuals paid some of the highest rates in the country.

Out of 60 classifications ranked from cheapest to most expensive, self-employment car insurance rates came in at number 48, with annual premiums of approximately $1,218.

Just to give you a comparative number, the cheapest insurance was found among scientists and was less than $1,000 annually.

Enter your ZIP code in the FREE box above to start searching for the best car insurance rates from providers in your area.

Stress, Stress, and More Stress

It is no secret that excessive stress can cause a lot of problems in a person’s life. Normally we think of heart attacks, nervous breakdowns, and family issues, but stress can even impact how safe a person is behind the wheel.
An individual who has tons of things on the mind and is highly anxious about getting work done is also someone who may not necessarily pay full attention to driving, and that person is more prone to having an accident.

If you know people who are self-employed, you know they have a tendency to be very stressed out.

In addition to simply preoccupying the mind, stress can lead to other physical disorders such as the previously-mentioned heart attack and nervous breakdown.
It’s not uncommon for heart attacks to occur during highly stressful situations, so a self-employed individual who climbs into a vehicle after having an argument with a vendor may be a prime candidate for a heart attack while they drive back to the office.

All of these things need to be considered by the insurance company when determining rates.

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Financial Stress

When you apply for a new policy, the company you applied with checks your credit rating as part of the quote process.

This may put some self-employed individuals at a disadvantage because their credit rating can be artificially affected by their business successes or failures.
In other words, a business owner’s personal finances may be completely in order, having all his bills current and having never missed a payment.
Yet if his business suffered a couple of loans that resulted in a few late payments, that would reflect poorly on his credit rating.
Furthermore, insurance companies are smart enough to know that when a company is facing financial stress, owners are not at their best performance.

Financial worries coupled with the everyday routine of keeping customers happy can make a very potent situation behind the wheel.

Another thing the car insurance companies know is that financial stress is the most difficult part of being a small business owner.

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Dual Use of Vehicles

It goes without saying that many small business owners and self-employed contractors use their vehicles for both personal and business use.

This type of scenario is a catch-22 for both the insurance company and the self-employed individual.

If insuring the vehicle for the business, the customer feels as though he’s paying too much; if it’s insured as a personal vehicle, the insurance provider believes it’s taking too high a risk for too little return.

Finding a happy medium between the two is generally difficult to accomplish.
In almost every case, a dual-use vehicle will be classified as a business vehicle for insurance purposes. This classification naturally drives insurance rates up.
If business owners cannot afford to keep separate personal and business vehicles, they will end up paying pretty high rates on the single vehicle they do own.
Furthermore, for those whose business vehicle is a large van or truck, the expense goes even higher.

High Mileage

The last thing to consider is the fact that unless their work is specifically designed to be done at home, they will ultimately spend a lot of time on the road driving between customers and suppliers.

Simple math dictates that the more miles an individual drives, the greater his chances of an accident or violation. This means naturally higher rates for self-employed individuals who drive frequently.

You can find affordable auto insurance rates, even if you’re self-employed, by entering your ZIP code in the FREE box below NOW!