side hustle

When Insurance Will (and Will Not) Cover Your Side Hustle Property

Around 44 million Americans have taken up what’s known as a side hustle. The number of people getting these extra jobs to supplement their income includes about 40 percent of all millennials in the U.S. Side hustles can go a long way to making us feel more financially secure. The added income acts as a safety net, especially as people are increasingly moving into densely populated, rent-expensive cities.

That said, there are certain risks associated with our treasured side hustles, especially if they require personal or specialized property. For example, freelance photographers need expensive cameras, and ride-hailing drivers need a working vehicle. Even the less tech-heavy side jobs, like freelance writing or editing, may require a computer and even a backup computer just in case things go wrong. Some of that property will be covered by traditional insurance, such as auto or renters insurance, but you may need to consider getting other types of coverage.

Related: 10 Steps to Start a Side Hustle (While Working a Full-Time Job)

Insurance that may cover your side hustle property

There are times when fairly common insurance policies will cover your property, even if it’s part of a side job. However, those policies do have limits.

Homeowners and renters insurance

Both homeowners and renters insurance policies cover a wide variety of property. If you have valuable computer equipment or technology that mostly stays in your home, both types of policies should help you recover the lost value of those items after covered events, such as a fire or theft.

However, these policies typically exclude business equipment, and some personal policies may not extend coverage outside the home. Freelance photographers often have a lot of expensive equipment such as lenses, stands and lighting. If your equipment is broken or stolen while it’s in your home, it’s covered, up to your limits. But if some equipment is stolen while out at a shoot, then coverage would depend on the terms in your policy. You’ll also need to consider whether your policy covers assets such as the files and documents on your computer. Even if your insurance helps you recover a lost or stolen computer, it might not help you recover lost or stolen data—or just a portion of its value.

A business owners policy, on the other hand, may cover your equipment and other assets regardless of where it’s located, including software programs and digital files, for an assigned value. Homeowners and renters insurance policies typically also have lower limits on specific high-value items that you might use in the course of your side hustle. Business owners policies may offer higher limits, so it can help make you whole after a covered event.

Auto insurance

There are many side hustle jobs that require you to use your personal vehicle, such as ride-hailing and food-delivery services. Traveling for work means your personal auto insurance coverage may not extend to those work-related activities.

You can rely on your personal auto insurance to cover you in the event of the occasional work-related travel, but if your travel is mostly “on the job,” your insurance company might fight back on providing coverage in the case of a loss event. If your policy doesn’t cover you during your side hustle, then you may need commercial auto insurance. This type of insurance covers losses and accidents that occur when you’re driving the vehicle for business purposes, from GrubHub delivery to Lyft transportation.  

Ride-hail companies such as Lyft and Uber offer coverage for their drivers, but the policies may be limited. You may turn to some of the personal auto insurers that provide more extensive coverage for ride-hail drivers, an increasingly common offering, but you may be hard-pressed to find specific endorsements for food delivery.

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Other property considerations

Beyond just covering your vehicle or the items in your home, it’s important to view your property as your key asset. For many people, their side hustle is completely reliant on the property that’s used to make money. Losing valuable equipment is itself costly, but the loss of opportunity to work and make money significantly compounds the issue.

If you do rely on your property to make money on the side, consider taking the following steps:

  • Invest in backup equipment: You may not be able to get a backup car, but you can back up other assets like a computer. It may be worth the expense when measured against the loss of potential income. Business interruption insurance exists for just this reason, but you’ll have to weigh the cost of it against how much you earn through your side hustle.
  • Have emergency funds in place: This is especially true for those who rely on a personal vehicle for their side hustle. Having an emergency fund should ease some of the pain during the down time between getting compensation for the loss and getting a replacement for your lost property. If you do ride-hailing or food delivery, for example, that emergency fund can go toward a down payment on a replacement vehicle or the cost of repairs.

If your personal property is your side hustle’s life and blood, it’s good to have a few lifelines available, just in case the nightmare scenario does happen.

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