Does my side hustle need insurance?

Even if your side hustle isn’t your full-time job, if it’s making money, it’s a business. Self-employed individuals need business insurance not only to comply with state laws, but to secure key protections and benefits for their side hustles, including:

• Providing financial protection against lawsuits for bodily injury, property damage, or negligence, which can lead to significant legal expenses, even if you win the case.
• Creating a protective shield around personal assets, so a sole proprietor’s home, personal savings, and other assets aren’t at risk if a lawsuit occurs.
• Offering protection for expensive equipment, valuable inventory, and other business property in the event of theft, fire, or natural disasters.
• Boosting credibility and earning trust with partners, potential customers, and clients—some of whom might even require insurance to sign a contract.
• Providing more growth opportunities, including renting a commercial space where the landlord requires commercial insurance.

Many people think that if they run their side hustle from home, use their own car, or only work their side gig a few hours a week, their personal insurance policies will cover any incidents.

However, there are several instances where a personal insurance policy won’t cover business-related liabilities, such as:

• If a rideshare driver gets into an accident while transporting customers, personal auto insurance likely won’t cover property damage.
• If a photographer slips and falls on a dance floor during a wedding gig, personal health insurance likely won’t cover medical bills, such as ER visits and medication.
• If someone breaks into a home-based studio and steals valuable inventory, most homeowner’s insurance policies won’t cover business-related property, equipment, and liability claims.

In some cases, you could add a homeowner's endorsement to your homeowner’s or renter’s insurance policy. This is a low-cost option for small side hustles with low revenue, no employees, minimal equipment, and very few visitors to a home office.

However, for established side gigs with substantial assets, revenue, and risks, standalone business insurance policies can provide broader coverage and higher limits.

General liability insurance protects your small business against the most common third-party risks of running a business, which is why most small business owners purchase this policy first.

This insurance covers your legal bills if someone sues you for:

• Third-party bodily injuries, such as if a customer trips and falls in your booth at a craft fair
• Third-party property damage, for example, if a house cleaner accidentally breaks a homeowner’s valuable lamp
• Advertising injuries, including accusations of copyright infringement if an artist accuses you of selling copies of their paintings without permission

Business personal property (BPP) insurance protects small businesses against losses from damaged or stolen property. This coverage is ideal for photographers, independent contractors, and other people who take their work equipment with them, paying to repair or replace their tangible business property.

There are two coverage options for BPP insurance:

• Actual cash value assesses an item’s replacement price, how old it was, and how much use it had, and then deducts the amount of depreciation to produce an assessed value for the claim.
• Replacement value covers the full cost of buying a brand-new item.

If your side hustle involves processing customer payment information or storing sensitive data, you’re a prime target for cyberattacks. Cyber insurance protects you from the costs of social engineering attacks, ransomware infections, and data breaches.

Cyber insurance helps cover:

• Data breach response costs, including notifying affected customers and providing credit monitoring
• Cyber extortion payments, hiring IT consultants, and other recovery expenses
• Lawsuit costs, including legal fees, settlements, or court-ordered judgments

Short-term general liability coverage can be a great option for side hustlers who only work on short projects or during limited timeframes. It offers the same protection as a standard general liability policy, but only for a set period.

For example, a graphic designer who takes occasional freelance projects, or a backyard florist who works summer weddings, may prefer the flexibility of short-term or seasonal insurance instead of buying a full annual policy.

However, year-round coverage is usually the smarter—and cheaper—choice for most businesses, including seasonal and part-time side hustles. Here's why:

• Stopping and restarting coverage creates gaps that leave your business exposed to risk.
• Annual policies often cost less per month over the long term.
• Continuous coverage is helpful if you need insurance to maintain business licenses or plan to expand.
• If you store equipment, inventory, or other business property year-round, an annual policy protects it even during the off-season.

Ready to protect your growing side hustle? Here are four steps to secure the right coverage for your small business:

By conducting a risk management assessment, you can evaluate threats and identify solutions to reduce the amount of damage your business could face.

For example, if clients come to your home to pick up custom cake orders, there’s a chance they could trip and fall on your front steps. Or, if you’re a freelance videographer, you risk having your expensive equipment stolen or damaged.

Understanding your risk level helps you connect potential incidents to the policies that can minimize the financial impact.

To secure adequate insurance coverage, you must determine the value of your business property in case you ever need to replace or repair it. Insurers typically use two methods to calculate commercial property claims:

• The replacement value is the amount it would cost to replace a stolen or destroyed asset with a brand-new one. For example, if a web developer’s computer was stolen, the policy would cover the cost of a new computer similar to the one taken.
• The actual cash value is the replacement value minus depreciation. If that same computer were three years old, the insurer would subtract its depreciated amount from the claim payout.

If you want the best price and coverage options for your side hustle, you need to compare quotes from multiple providers. Talk to a licensed insurance broker or use a digital marketplace to compare quotes quickly from trusted, top-rated providers.

As your side business grows, it’s important to monitor your liability insurance terms, exclusions, and insurance costs.

Scheduling an annual review with your insurance agent helps ensure your coverage and premiums align with your evolving business needs.