Why Business Insurance Matters for Your Side Hustle

In today’s gig economy, side hustles have become a popular way to earn extra income, whether it’s freelancing, selling handmade goods, or driving for a rideshare company. However, many side hustlers overlook a critical aspect of running a business: insurance. Even if your side hustle isn’t generating significant revenue, it’s essential to consider business insurance to protect yourself and your personal finances from potential risks.

According to Jovan Johnson, a Certified Financial Planner (CFP®) and cofounder of Piece of Wealth Planning in Atlanta, "All it takes is one lawsuit, and you could potentially lose your personal assets." Johnson emphasizes that the cost of insurance is far outweighed by the protection it provides. Business insurance can safeguard your personal assets, such as your home, savings, and retirement funds, in the event of a lawsuit or unforeseen circumstances related to your side hustle.

As a freelance writer expanding into organizing in-person events and selling stickers, I initially hesitated to invest in business insurance. After all, these ventures weren’t generating substantial income, and the cost of insurance seemed hard to justify. However, understanding the potential risks changed my perspective. Whether you’re dealing with customers, selling products, or operating a physical location, there are inherent risks in running a business. Without proper insurance, you could be held personally liable for damages, medical bills, or other expenses, which could have devastating financial consequences.

Johnson explains that business insurance can protect you in a variety of situations, such as if a client is injured at your location or if your business is damaged. General liability insurance, for example, can cover medical bills, property damage, or advertising injuries like defamation or copyright infringement. These policies essentially create a financial safety net, ensuring that your personal assets remain secure even if your business faces unexpected challenges.

If you’re unsure whether your side hustle needs insurance, consider this: any interaction with customers or clients carries some level of risk. Even if you’re only making a small amount of money, the potential for lawsuits or accidents is real. By investing in business insurance, you’re not only protecting your business but also your family’s financial well-being.

Types of Business Insurance to Consider for Your Side Hustle

When it comes to business insurance, there are several types of policies that can be tailored to meet the specific needs of your side hustle. Understanding the different types of insurance available can help you make informed decisions about how to protect yourself and your business.

1. General Liability Insurance: This type of insurance is often considered the foundation of any business insurance policy. It protects you against claims of bodily injury, property damage, or personal injury, such as defamation or invasion of privacy. For example, if a client trips and falls at your event or if you accidentally damage someone’s property while delivering a product, general liability insurance can cover the resulting costs.

2. Commercial Auto Insurance: If you use your car for business-related activities, such as food delivery, rideshare driving, or transporting supplies, commercial auto insurance is essential. This type of insurance covers damages to your vehicle, bodily injury to you or your passengers, and property damage caused to others. Many personal auto insurance policies do not cover business-related driving, so it’s crucial to have a separate commercial policy in place.

3. Cybersecurity Insurance: In today’s digital age, cybersecurity is a growing concern, especially if your business involves handling sensitive customer data. Cybersecurity insurance can protect you in the event of cyberattacks, such as hacking, phishing, malware, or ransomware. According to Johnson, if you have an online business or store personal or financial information about your customers, you’re vulnerable to these types of attacks. In fact, a 2024 survey by the U.S. Chamber of Commerce found that 60% of small business owners consider cybersecurity threats a top concern. The cost of a data breach can be significant, with the average cost per breached record reaching $164.45, according to a report by IBM and the Ponemon Institute.

4. Short-Term Policies for Seasonal or One-Time Events: If your side hustle is seasonal or involves one-time events, such as a holiday market or a single workshop, you may only need insurance for a specific period. Short-term policies can provide general liability coverage for just a few hours, a day, or a weekend. For example, if you’re hosting an in-person event, short-term insurance can protect you in case someone is injured at the venue.

In addition to these types of insurance, there are other policies you might consider depending on your specific business needs. For example, a Business Owner’s Policy (BOP) combines general liability insurance with business property insurance, which can be useful if you have a physical location or store inventory. Professional liability insurance, also known as Errors and Omissions (E&O) insurance, is another important consideration if you provide services that could potentially result in claims of negligence or mistakes.

How to Choose the Right Insurance for Your Side Hustle

Choosing the right insurance for your side hustle can feel overwhelming, especially if you’re just starting out. However, by taking a few key steps, you can narrow down your options and find a policy that meets your needs and budget.

First, it’s important to understand the specific risks associated with your type of business. For example, if you’re a freelance writer, your risks may be different than those of a food delivery driver or an event planner. Johnson recommends doing your own research to identify potential hazards in your industry. You can also look to colleagues or peers who are engaged in similar side hustles for advice on the types of coverage they have found most useful.

Another way to determine your insurance needs is to consider the nature of your business and the types of customers you serve. For example, if you sell physical products, you may need product liability insurance to protect yourself in case a product causes harm to a customer. If you have a physical location, you may need coverage for theft, vandalism, or property damage. Even if you work primarily from home, there may be risks associated with having clients visit your workspace or storing inventory.

In addition to researching your industry and consulting with others, it’s a good idea to speak with a financial professional, such as a financial advisor or insurance broker. They can help you assess your specific needs and recommend policies that provide adequate coverage without unnecessary expenses. Many employers offer free or low-cost financial counseling as part of their benefits packages, so be sure to take advantage of these resources if they’re available.

The Role of Insurance Providers in Protecting Your Business

Finding the right insurance provider is an essential part of protecting your business. With so many options available, it can be challenging to know where to start. However, by comparing policies and providers, you can find a plan that meets your needs and budget.

Simply Business, a top-rated insurer, specializes in providing customized insurance solutions for small businesses and side hustlers. Their platform allows you to compare quotes from multiple insurance companies in just a few minutes, making it easy to find affordable coverage. With general liability policies starting at $20.83 per month, Simply Business offers flexible and budget-friendly options for business owners at every stage.

One of the standout features of Simply Business is its user-friendly online platform, which is available 24/7. You can quickly find the coverage you need by answering a few simple questions about your business. The platform also offers customized coverage recommendations based on your industry and the type of work you do. This ensures that you’re not paying for coverage you don’t need while still having protection where it matters most.

In addition to its convenience and affordability, Simply Business has earned a reputation for excellent customer service. The company insures over 1 million small business owners worldwide and offers coverage for more than 400 types of businesses. Whether you’re a freelance writer, event planner, or food delivery driver, Simply Business has options that can be tailored to your specific needs.

Expert Tips and Recommendations for Side Hustlers

For side hustlers who are just starting to explore the world of business insurance, Johnson offers a few key pieces of advice. First, he recommends taking the time to understand your specific insurance needs. This involves identifying the types of risks your business faces and determining the level of coverage required to protect against those risks.

Johnson also emphasizes the importance of shopping around for insurance quotes. By comparing policies from multiple providers, you can find the best combination of coverage and cost. He suggests starting with general liability insurance, as it provides broad protection against a variety of potential risks. From there, you can add additional types of coverage as needed.

If you’re unsure where to begin, Johnson recommends reaching out to colleagues or peers who are also engaged in side hustles. They can provide valuable insights into the types of insurance they’ve found most useful and may even be able to recommend specific providers. Additionally, many industries have professional associations or online communities where you can ask questions and get advice from more experienced business owners.

Finally, Johnson stresses the importance of regularly reviewing and updating your insurance coverage as your business grows and evolves. Your insurance needs may change over time, so it’s essential to ensure that your policies continue to provide adequate protection. By staying informed and proactive, you can protect both your business and your personal finances from potential risks.

Conclusion: Protecting Your Side Hustle with the Right Insurance

In conclusion, business insurance is a critical investment for anyone running a side hustle, no matter how small. While it may seem like an unnecessary expense at first, the potential risks of operating a business without proper coverage far outweigh the cost of a monthly premium. By understanding your insurance needs and choosing the right policies, you can protect yourself, your business, and your family from unforeseen challenges.

For side hustlers who are just starting to explore their insurance options, platforms like Simply Business offer a convenient and affordable way to compare quotes and find customized coverage. With a wide range of policies available, from general liability to commercial auto insurance, you can find a plan that meets your unique needs and budget.

Ultimately, business insurance provides peace of mind, allowing you to focus on growing your side hustle without worrying about the "what ifs." By taking the time to research and invest in the right insurance policies, you can ensure that both your business and your personal finances are protected for the long haul.

This summary provides a comprehensive overview of the importance of business insurance for side hustlers, the types of insurance available, and how to choose the right coverage for your specific needs. By prioritizing insurance, you can safeguard your business and ensure a secure financial future.