Insurance for your Side Business

Insurance for Your Side Business When you’re looking to reach your financial goals faster, earning a little extra money can go a long way.  A side business can help you save more. It can also grow your marketable skills and...

Insurance for Your Side Business

When you’re looking to reach your financial goals faster, earning a little extra money can go a long way.  A side business can help you save more. It can also grow your marketable skills and gain the flexibility to take more risks with your career.

Your side business might be part-time and you might work from home, but it is a business. As a business owner, you have a whole host of responsibilities and liabilities beyond that of a regular employee.

You might assume that your personal insurance would extend to your tiny side hustle. But standard homeowner’s insurance policies do not extended to businesses, no matter the size. If a client falls and breaks a leg on the way to your photography studio in your house, your homeowner’s insurance won’t be of any help.

Getting proper insurance coverage is one way to mitigate risk for your family so you aren’t exposing your family to great risk. Even though your business might be small, you could be exposed to a big loss, and that’s what matters.

There are several types of insurance policies that could work for your business. You should be able to find one that’s affordable depending on the size of your business.

Endorsement on Homeowner’s Insurance Policy

The simplest option is to add an endorsement onto your existing homeowner’s insurance policy. The cost is minimal, and you should be able to obtain coverage for a small amount of equipment. You won’t have protection for the falling client visiting your studio, but if photography equipment is stolen, you’d be able to replace it.

If you don’t have regular business visitors and you have a minimal amount of equipment, this could be a good fit.

Home-Based Business Insurance Policy

As your business grows, you’ll probably need additional coverage. A home-based business policy will offer protection for a wider range of circumstances. If you run the business from your home and do not have a commercial space, you might qualify.  

There will be a higher limit for business property loss. You’ll also have general liability coverage, which would cover that client that fell in your home. General liability coverage may also include coverage for slander and libel. This is a good thing to have as a writer, social media consultant, or video producer.

Another benefit is that if you have to shut your business down due to damage to your home, the policy will cover for business losses and on-going expenses like payroll.

Less expensive policies like these do come with specific guidelines to qualify. Home-based insurance is often limited to certain types of businesses, and the rules change from state to state.

Business Owner’s Policy

A business owner’s policy offers much of the same coverage as a home-based business policy. But unlike a home-based business policy, almost every business should qualify. The policy combines a general liability policy as well as property policy. Typically, you’ll get a larger amount of coverage with a business owner’s policy.

Specific Insurance for Your Side Business

While an endorsement, a home business policy, or a business owner’s policy while cover many of you risks as a business owner, you might need to add specific coverage depending on your business.

Professionals who give advice for a living such as lawyers, accountants, and consultants will want to look into supplementing a business owner’s policy with professional liability insurance, also called errors & omissions insurance. If you consult on the side, you’ll want to consider this as well.

If you sell or manufacture products, you are liable for the safety of those who use your products. Etsy or Amazon sellers might want to consider product liability coverage.

Depending on the type of work you do on the side, you might want to consider obtaining additional disability insurance. If your side business is in dangerous work like tree trimming, carpentry, or welding, disability insurance could protect you if you injure yourself while work at your side business. If you worked for a company, an accident on the job would be covered by worker’s compensation. But as side business, you’d want separate disability insurance.

Insurance for Your Growing Business

As your company grows, additional insurance might be needed. But for many small businesses, a business owner’s policy is enough. Once you get to a larger scale, you can upgrade your business owner’s policy to a larger commercial policy.

If you add employees to your business, you’ll need to obtain worker’s compensation insurance. This is required by state law for every state but Texas, and the requirement kicks in at somewhere between 3 to 5 employees. If you live in one of six locations (CA, HI, NJ, NY, Puerto Rico, or RI), you’ll need to also provide disability insurance for your employees.