The gig economy is booming, and people everywhere are turning their skills into income — from kitchen baking and weekend rideshare driving, to freelance design after work hours. But a minor fender bender while driving for a rideshare, a burnt batch of goods that damages a rented kitchen, or a hacked laptop that compromises client data can quickly turn profits into out-of-pocket losses. 

The right insurance coverage can help turn a costly surprise into a manageable setback for part-time entrepreneurs. Here’s what to know if you’re wondering whether you need insurance for your side hustle.

What counts as a side hustle?

If you earn extra income by selling goods, providing services or building an online presence as an influencer, your work is likely a side hustle. Some examples include driving for a rideshare app, baking custom cakes or cookies, selling your handcrafted goods on an online marketplace, earning ad revenue from videos or freelancing part time as a writer or designer.

Whatever your side hustle, it could expose you to risk if a customer claims dissatisfaction or harm because of your work. Before that happens, it’s important to ensure your income and assets are protected.

Why your home or auto insurance may not be enough

It’s easy to assume that if you operate on your side hustle at home or use your personal vehicle for rideshare work, then your existing personal home and auto insurance policies will have your back if there’s a problem.

However, most personal insurance policies exclude or limit claims related to business activities. For example, if you use your personal vehicle for rideshare work in your free time, you should review your auto policy carefully. The Insurance Information Institute (III) notes that a standard personal auto policy will not provide coverage for rideshare.¹ As a result, if you’re involved in an accident while transporting a rideshare passenger, you could be personally responsible for any damages, losses or injuries.

Common side hustle insurance needs

Protecting your side hustle revenue starts by working with a licensed insurance agent. They can talk you through the coverage options that will work best for your situation, depending on the type of side-gig work you do.

Some common coverage needs for side hustles may include:

• General liability policies. These may help protect you from claims related to copyright infringement, libel and slander, and injury claims. General liability policies can also help offset your legal defense costs in case of a lawsuit, up to your policy limit.
• Commercial automobile policies. Adding this type of coverage to your personal vehicle can help protect you from liability and property damage claims related to rideshare and delivery activities.
• Professional liability (errors and omissions, or E&O) policies. Service-based side hustles like consulting, life coaching, writing and design can benefit from this type of coverage for protection against claims resulting from unintentional errors.

Industry-specific risks of note

Your exact coverage needs will depend on the kind of side hustle you have but, in general, certain kinds of side gigs need particular policies. For example:

• Freelancers usually will benefit from coverage in case of errors or omissions in their work. They may also need cybersecurity insurance to limit their liability in case of data breaches, especially those who handle sensitive client data, like bookkeeping or health care concierge services.
• Makers may need coverage in case a customer claims injury due to one of their products. If your side hustle is preparing food, sewing or tailoring clothing, making jewelry, custom-building cabinets or anything else related to physical products, a general liability policy may help address those risks.
• Fitness coaches and personal trainers should consider coverage, as supporting clients in their health and fitness goals carries an inherent risk of injury.

Cost and customization

In addition to a lack of awareness about insurance needs, another thing that may prevent people from insuring their side hustle is concern about the cost. But coverage for side gigs can be more affordable than you might expect.

You may also be able to save money on coverage by tailoring it to your specific needs or by bundling policies for potential savings. One popular type of coverage is a business owners policy (BOP), which combines multiple types of coverage into a single policy and may help reduce overall costs while broadening protection.

The takeaway

When you have a side hustle, you’re putting in extra work to build a better future. Protecting that future starts with the right coverage. Rather than assuming that your personal policies will help if something goes wrong, it’s wise to review your coverage now with a licensed insurance agent. They can help you understand which of your side hustle activities are already covered and where you need more protection.

As part of our commitment to helping you improve your economic well-being and quality of life, RBFCU Insurance Agency provides great coverage, affordable prices and responsive service. Get your free quote today to learn about coverage for your side hustle or growing venture.