WHEN YOUR SIDE HUSTLE REQUIRES INSURANCE

By Allison Hess

Small business insurance Policy
For the best in Side Hustle insurance, Call us at The Huttenlocher Group (Photo by Getty Images)

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If you have a side hustle, you’re likely a passionate, committed, dedicated individual. Maybe you want to build an empire from the ground up; maybe you want to do some good in the world, or maybe you just want to make some extra money on the side. Whatever your reasoning, you’re taking extra steps to get it done in order to reach some sort of goal or aspiration.


But while you’re grinding to reach that goal, you could forget to protect your ideas. If you don’t have the proper insurance to shield your small business or side gig, you could suddenly find yourself in a hefty lawsuit that kills your business, your dreams, and even your personal assets.


Don’t let that scare you. And don’t let it deter you from following your dreams and your side hustle.


Instead, let it inspire you to take the necessary steps to protect yourself from the hefty risk that comes with owning a small business and working for yourself.


WHAT KIND OF INSURANCE DO YOU NEED?


Your side hustle could include anything from babysitting to blogging or running a food delivery service to freelance graphic designing. Anything you do on the side should be considered a “small business” and needs insurance. But each type of small business is different, so protection needs are also different.


Below you’ll find the different types of professional insurance your small business might need.


Business Owner’s Policy (BOP)


For: Anyone and everyone


A BOP is not a form of coverage itself but a packaged policy of all the coverages a business owner might need. It generally includes liability, property, vehicle, interruption, and crime insurance. You can usually customize a BOP based on your specific business’s needs and requirements. Think of it as a small business bundle. You should always get a quote for a BOP, so you can see the cost savings versus purchasing professional insurance separately.


Professional Liability Insurance


For: Everyone


Every small business needs professional liability insurance, sometimes called errors and omissions insurance (E&O). This covers any claims and lawsuits against your business due to negligence, failure to perform, or mistakes. If your business causes any sort of bodily injury or property damage to a customer, partner, or third-party, the business could be sued at a hefty expense. Professional liability insurance protects your business and personal assets in the case of a lawsuit.


Property Insurance


For: Everyone

You need to protect your business’ assets from unexpected fire, storm, theft, natural disasters, and more. If you own or lease a space or you hold equipment, inventory, and furniture, property insurance will cover unexpected damages.


Even if you work from home, you may need to get additional professional property insurance. Many homeowners’ policies will not cover business-owned assets and equipment. In addition, if you claim a portion of your home as tax-deductible on your business expenses (such as a home office or dedicated room), that area may also not be covered under your home insurance policy; even if your entire house is damaged, your homeowners’ property policy may only cover the part in which you live, while the professional property would cover the part in which you work


Be aware of what your property insurance does and doesn’t cover, as many professional property policies won’t cover flood or other incidents. Talk to an insurance agent about your business’ location, situation, and industry to ensure you get the right amount of coverage. 


Crime Insurance


For: Everyone


Crime insurance is typically covered under a BOP bundle. It will help protect your property from fraud, theft, and forgery. Crime can be related to both property insurance (#3) and cyber liability insurance (#8), so talk to an agent to make sure you’re fully protected from all attackers out there. Think of crime insurance as your very own Batman fighting against the Jokers that want to bring down your Gotham business!


Workers’ Compensation


For: Businesses with at least one employee (not the owner)


If you employ at least one individual, you need workers’ comp. This insurance protects your company from any legal issues if your employees are injured on the job. This includes all types of medical injury; even carpal tunnel from blogging all day or scoliosis from bending over can result in hefty lawsuits against your business.


If you hold workers’ compensation insurance, your employees waive their rights to sue in the case of an accident. Instead, workers’ comp provides the employee wage replacement and medical benefits while they are out of work due to the injury. It may sometimes also cover disability or death benefits. Most states require workers’ compensation for W2 employees. 


Product Liability Insurance


For: Businesses that develop or manufacture a product


If you make or sell a product on the market, a consumer could sue you if the product causes harm or damage. Product liability covers any costs associated with lawsuits or settlements related to a defect in your product. It may also cover costs related to product recalls or discontinued products.


These policies can even be tailored to your industry or product. Insuring a food product, which could have serious health risks, is different than insuring a couch, which would have potential physical damage concerns. 


Vehicle Insurance


For: Any company with vehicles


Vehicle or commercial auto insurance protects any business-owned vehicles or vehicles used for business purposes. This also applies to employees who drive your business car or use their own car for delivering goods or services for a fee (like a food delivery service).


Usually, if an employee uses their own car for business purposes that aren’t delivery, any accidents would be covered under their own personal insurance. Be sure to discuss this with your employees at the time of hiring to ensure they have auto insurance and are comfortable with this risk. If they don’t have the right insurance, you can also consider adding non-owned auto liability to your BOP policy.


General vehicle insurance usually only covers liability, which is when another person sues you for damages. To cover property damage to your own vehicle, you may need comprehensive commercial auto insurance.


Cyber Liability Insurance