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As an aspiring entrepreneur, you may decide to pursue a side hustle in order to fund early stages of the business, or launch your business while maintaining an income stream. Whether you’re driving for Uber on the weekends or creating the next innovative online platform, a side hustle is a great way to help drive your entrepreneurial passion. However, as soon as that side hustle brings you into contact with eager customers, you begin to face risks. If you get in an accident while carrying passengers to their next bar hop, will your car insurance cover it? And if someone gets sick from one of your awesome cupcakes, will you have to shutter your side business for good? There are a lot of unknowns that come with taking in cash on the side. The good thing is, side hustle insurance is available to assist with most of these scenarios.
How do you run your side hustle?
Before you start purchasing coverage, think critically about what kind of side hustle you’re actually running. Different jobs come with different risks, and what insurance you’ll need varies depending on those risks.
An Uber driver and an Etsy shop probably are not going to have similar risks, so some of the insurance coverages you’ll consider will be quite different.
You started your own business
It’s not uncommon for someone working full or part time for an employer to have started their own business on the side.
Over 500,000 new businesses start in the U.S. every month.
You’re in surprisingly good company, but you also face a lot of perils out there. Part of the risk with a new, small business is losing it all due to a claim against the business or some other unexpected expense that simply exceeds the kind of cash you have around. Nothing puts an end to an exciting side hustle faster than a surprise insurance claim.
So what kind of insurance will you need to protect that new, budding business? That depends on what type of business you’ve created.
General liability insurance policy
Let’s say you’re running a business that involves physically interacting with your customers or their property; this might involve making custom desserts or even interior design. For these sorts of businesses, you would want to consider a general liability insurance policy. This policy will cover bodily injury claims that could be tied to your business, property damage your business may be responsible for and expenses related to those claims.
Professional liability insurance policy
Alongside this, you may want to consider a professional liability insurance policy. This type of policy is commonly used by those whose business involves providing expert advice or services, such as a personal trainer or financial advisor. A professional liability policy will cover risks associated with customers who believe your services or advice were somehow erroneous or incomplete.
Business owners policy
If your business has an office space or requires expensive equipment, such as a photography business, you may want to consider a business owners policy. This policy provides many of the protections of a general liability policy while also providing property coverage, which can be quite valuable when you’re getting started and can’t afford to replace an expensive piece of equipment.
You operate through a third party platform
Maybe your side hustle needs a little help. Third party platforms that connect people like you to eager customers are pretty much everywhere these days. Sites and services like Etsy, Tradesy, thredUP, Threadflip or even eBay or Craigslist all exist to help serve as an intermediary between you and the people who are searching for your products or services.
If you’re using these sites as more than just a one-off, you’re going to need to consider your insurance options. General liability insurance may be good to consider depending on your business model. Depending on the platform and situation, you may be coming into direct contact with customers, meaning there’s still the chance you could end up with a general liability claim.
You’ll also want to consider shipping insurance. Etsy, for example, will help you attain parcel insurance. Insurance can go up to $5,000, though some types of packages cannot receive insurance. Many of the other third party sites offer similar options. eBay, for example, provides information on why sellers should strongly consider purchasing insurance for all of the items they sell and ship.
Reputation is everything with this type of side hustle, so you’ll need to protect it any way you can. All it takes is a few bad reviews before your personal online store is in trouble.
You work part-time for a physical business
This one can be tricky, as it really all depends on what you’re doing. Are you working as a waitress? Chances are you’re not going to need to buy additional insurance. Your business will likely have the insurance it needs to cover you and the business itself, should a customer slip on a spill or get food poisoning.
However, you may be working for a physical business but in a manner that requires you to consider your own insurance policies. Physical trainers, for example, technically work for the gym, but are often legally considered to be independent of the gym when it comes to claims. In this scenario, you may actually need your own professional liability policy, as you can be held responsible for client injuries they believe to be due to the fitness regimen you prescribed.