It’s not uncommon to have a side hustle nowadays. While, by definition, it’s not your main source of income, you may still rely on it, and you’ve likely invested a good deal of your time, energy, and money into its success.
But what if something goes wrong? We find out whether insurance is necessary for side-hustle businesses, and if so, to what extent.
Tip: Do you have personal insurance? Find out more about car and home insurance.
The case for business insurance
Iain Massey, senior manager of broker enablement at Indwe Risk Services, says that business insurance can protect your side-hustle or micro business during unforeseen circumstances.
He explains that business insurance covers a range of factors, such as fire or water damage to assets and machinery, loss of income, liability to third parties, and motor vehicle theft or damage. If your side hustle is part-time or growing, it could still benefit from basic business insurance, such as fire and liability cover.
The initial insurance you choose to take out will depend on the nature of your business, and the potential risks involved with running it. The following questions, by way of example, identify certain risks.
- Does your work involve children or animals? If you have a dog-walking business as your side hustle, and one of the pets in your care attacks a pedestrian, you will be liable for their hospital bills. Similarly, if you work with children and they are accidentally injured while in your care, you could sit with hefty hospital expenses.
- Do you process or store sensitive information on your computer? If your laptop gets stolen and someone exploits the personal information that you have stored therein, you may find yourself in legal trouble with your customers. This can lead to both monetary loss and damage to your professional reputation.
- Do you use your car for your business? This may include, for example, transporting goods or passengers. If you get into an accident, it could halt your additional income – which you may be reliant on – for the foreseeable future.
You need to carefully consider how your business interacts with both beings and the environment, and determine what kind of basic, or comprehensive, insurance will be applicable.
Massey says that some small businesses will look at the cost of insurance and say, “Well, it’s a little expensive, so I’m willing to take the risk”. But you may ultimately kick yourself when something goes wrong, and wish you had insurance in place.
When should you take out business insurance?
Massey says that as soon as your business is capable of incurring the cost of insurance, you should start shopping around for the most suitable option.
“During the start-up stage of your business, you should take out cover for catastrophic events that may impact your assets,” says Massey. He adds that basic business insurance is relatively inexpensive.
“Once the profits start to accrue, you can take out comprehensive insurance that will protect your business from more nuanced harm,” he says.
Has a lack of business insurance landed you in debt? Get help here.