When Do You Need Insurance For Your "Side Hustle"?

​Today’s workforce is changing. A recent study by Accenture estimates that by the year 2020, 40% of America’s total workforce will consist of sole proprietors and independent contractors. While we’ve addressed that in a past article, we need to take a closer look at trends in the workforce today. Today it’s all about the “Side Hustle”. With the popularity of guru’s like Gary Vaynerchuk, more and more Americans are making the decision to work hard now to provide for a secure future.

Bankrate estimates that over 44 million Americans now have a “Side Hustle”, that’s 1 in 2 millenials, and one in 4 baby boomers. As more people see the benefits of creating their perfect side job, we see that many are working as independent contractors, or self employed business owners. At any rate, if you have what can legitimately be called a “side hustle”, you are more than likely pretty passionate about it . . . or at least passionate about the benefits like freedom from debt and financial independence you hope it brings.

Maybe you want to be the next Microsoft, Apple, Google, or Facebook and build an empire in whatever industry your side hustle is in, or you just want to earn some extra money on the side, whatever your purpose, you’re working hard to get it done in order to reach a certain goal.

While you’re putting in the hours and burning the candle at both ends, more times than not people forget to protect their ideas. They don’t take the time to make sure they have the proper insurance to protect their small business, or side hustle, or even worse . . . their home and personal assets.

Let’s take a look at what steps are necessary to protect yourself from the big risk that may not be your favorite part of owning a small business and working for yourself.

No matter what your side hustle happens to be, whether it’s blogging, freelance work, carpentry, or anything in between, your side gig should be considered a small business and as such, you need insurance. Just like with every individual, not all small businesses are created the same and each one has it’s own specific needs to consider.
Here are some types of professional insurance your small business might need.

• Business Owner’s Policy (BOP) – A BOP is a package policy that usually includes all of the coverages a typical small business owner might need. It generally includes general liability, personal/advertising injury, vehicle coverage, business interruption, and crime to name a few. These can be customized to fit your needs, whether you’re a plumber picking up side work, or a freelance graphic designer. This is a good place to start when looking to find the right coverage.
• Professional Liability Insurance – Every small business needs professional liability insurance, typically called E&O (Errors and Omissions) coverage. This covers claims and lawsuits against your business due to negligence, mistakes, or failure to perform. If your business causes any kind of bodily injury, or property damage to a customer, partner, or a third party, your business could be sued for a very large amount. Professional Liability Insurance protects your business and personal assets in case of a lawsuit.
• Property Insurance – This has to deal with your business’s property in protecting it from physical damage from fire, theft, storms, natural disasters, and many other causes. If you own or lease equipment, space, inventory, or furniture, Property Insurance is very important to have.
• Vehicle Insurance – Your personal auto insurance may not cover business use of your vehicles, check your policy. Commercial auto insurance protects any business owned vehicles used for business purposes. This also applies to employees who use their own car for business purposes such as delivering goods or services.
• Product Liability Insurance – If you make, or sell a product, any consumer may sue you if that product causes and harm, or damage. Product Liability insurance covers costs associated with lawsuits or settlements related to a defect in your product. It can also cover costs related to product recalls or discontinued products. These policies can be tailored to specific industries, or products. Risks involved with selling food products are different than durable goods.
• Workers’ Compensation Insurance – If you have one employee, or more you need workers’ compensation insurance. This protects you and your employees in case of an injury on the job. It can be anything from an accident like a fall that causes broken bones, or a repetitive motion injury like carpal tunnel syndrome.
• Cyber Liability Insurance – This protects you if your computer systems and software are hacked and customer’s personal information is exposed. If you’re attacked in any way that compromises your clients’ personal information, they could sue you for breach of privacy. Cyber liability insurance can help cover the costs of lawsuits or settlements. It can also cover notification costs, credit monitoring, data retrieving, fines and penalties, legal defense, and personal and client loss from identity theft.

Right now you a probably thinking that this is an awful lot of insurance for a side hustle. You’re right, a lot can happen when you own a business. There is a lot at risk. But the reason you’re doing it is because you know that you have to risk it to reach your goals, but don’t forget to protect everything you’re working for!

Don’t be discouraged and overwhelmed. Many of these coverages, and more, can be found in package policies tailors specifically for your industry. C. Pina Insurance works with companies such as Hiscox, and Tokio Marine who specialize in small and micro-businesses and artisan contractors. Get in touch to discuss your side hustle and see how simple and affordable we can make protecting your dream.
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