- Business insurance can protect your side hustle and your personal finances.
- Even if you aren't earning much, you may still carry risk.
- You can get different types of business insurance to cover your specific needs.
- Easily compare prices for your small business insurance needs online with Simply Business.
As a freelance writer who is also expanding to organizing more in-person events and selling stickers, I've been hesitant to get business insurance for my side hustles. I'm not raking in a ton of income from these new ventures, so it's hard to justify the cost of insurance for hustles that aren't generating a lot of revenue.
If you're a side hustler who is barely making money, you might not think you need business insurance — but think again, says Jovan Johnson, a CFP® and cofounder of Piece of Wealth Planning in Atlanta. "All it takes is one lawsuit, and you could potentially lose your personal assets," he says. "The coverage is more valuable than your monthly premium. You're protecting your personal assets and your family."
Here are some of the reasons you should consider getting business insurance for your side hustle:
To protect your personal assets
Any time you operate a business and serve customers, Johnson explains, there's a risk. Unfortunately, lawsuits can and do happen.
"For instance, any job where you have customers or if you sell products, there's a risk you could be sued," he says. "There are hidden risks in running a business, and you don't want a client to touch your personal assets that you need to use for retirement or family."
A business insurance policy can protect your personal assets and family should you be sued if your office is damaged or someone slips and falls on-site, requiring you to cover the medical bills.
If your side hustle uses your car
If you use your car for your side hustles — think food delivery, rideshare driving, driving to pick up supplies, or driving to clients' homes — commercial auto insurance coverage can pay for damages on your car, bodily damage, or property damage caused to others. If there are medical bills, it can cover you and your passengers.
If you store customers' information digitally
Cybersecurity insurance may not come to mind when considering insurance for your side hustle, but if you have an online business or keep customers' sensitive personal or financial information, you're vulnerable to a cyber attack, says Johnson. This might include malware, phishing, malware, and ransomware.
A 2024 U.S. Chamber of Commerce survey cited by the Small Business Administration found 60% of small business owners report that cybersecurity threats are top of mind. Further, a report from IBM and the Ponemon Institute shared by the SBA found that the cost of each breached record is $164.
If your side hustle is seasonal
Consider a short-term policy if you side hustle seasonally or anticipate only needing general liability coverage for a one-time occurrence, even just a few hours for an in-person event.
If you're hosting an event, you can get coverage if someone injures themselves at the location. Insurance such as commercial property or general liability insurance can make sense for these specific scenarios, Johnson says.
You might want to consider a policy for a one-time occurrence if you work from a computer 99% of the time, he continues.
If you only need coverage for specific activities
To home in on exactly what kind of business insurance is best for you, start by knowing your type of business; Johnson recommends doing your own research. Then, narrow in on your industry and the type of customers you serve, as well as whether you sell physical products and have a physical location.
Another way to figure out your business insurance needs is to ask your colleagues what type of coverage they have, says Johnson. For instance, if you do food delivery, talk to folks who also side hustle as food delivery drivers. That way, you can better understand the specifics, such as the type and amount of coverage.
Here are some of the main types of business insurance:
General liability
Also known as business liability insurance, general liability insurance can cover costs due to bodily injury, property damage, or advertising injury, such as defamation or copyright infringement. It can also cover damages related to personal injury, which is harm your customers or clients may have experienced due to potential negligence.
Business owner's (BOP)
A business owner's liability policy, or BOP, combines business liability and business property insurance.
For instance, consider getting BOP coverage if you have a brick-and-mortar location or keep your inventory housed at a warehouse. "Anybody with a physical location might be prone to theft or vandalism," says Johnson. "No matter the type of business you run, you're at risk of some issue."
Professional liability (E&O)
Also known as errors and omissions insurance, professional liability coverage can help you cover lawsuits that may pop up from claims of mistakes or negligence.
If you can, talk to a financial professional, like afinancial advisor,to assess your needs. Your day job might offer free or low-cost financial coaching or counseling, which can help you understand insurance basics.
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