It seems like everyone has a side hustle these days. If your side hustle makes you a sole proprietor, you get to keep all the profits. Unfortunately, you’re also on the hook for all the losses and liabilities. Protecting your sole proprietorship side hustle with an appropriate insurance policy is extremely important.
By definition, a sole proprietorship is “the simplest and most common structure chosen to start a business. It is an unincorporated business owned and run by one individual with no distinction between the business and you, the owner. You are entitled to all profits and are responsible for all your business’s debts, losses, and liabilities” (courtesy of the SBA). Filing taxes as a sole proprietor is easy as the business is you (unless you have a DBA), but because there is no legal separation between you and your business, you can be held personally liable for the debts and obligations of the business. This risk extends to any liabilities incurred as a result of employee actions, meaning that you are also held liable for the actions of any/all your employees.
So what side hustles need to be insured? Generally speaking, all of them. Here are a few examples of common side hustles and why it’s so important for those sole proprietors to be insured.
If you’re a dog walker… Let’s face it, animals can be unpredictable. As a professional dog walker, you’re responsible for the financial ramifications of working with multiple dogs, often at the same time. These can include expensive medical injury claims, legal costs, vet bills, and costs related to property damage and theft. If you don’t have insurance, claimants can hold you personally responsible. Possible incidents that insurance could cover would include if a dog in your care bites someone, if a dog you’re walking gets into a fight and both dogs are injured, or if a dog in your care damages property belonging to a third party.
If you work with computers, data, or social media… Two words: data breach. In today’s world misplacing or losing a client’s information due to a mistake, negligence, or hackers is a reality. Having general liability, professional liability, cyber insurance, and/or another specialized policy may protect you if the worst should happen.
If you’re making a product… If you’re making a product at home and selling it online, you are leaving yourself open to liability claims. From allergic reactions to small pieces being swallowed, there are many unforeseen product liability risks that could affect sole proprietors. Product liability insurance is usually more specialized than general liability insurance, and sole proprietors making and selling products should consider carrying both to be fully covered.
If your side hustle involves driving… Your personal auto insurance policy does not cover you if/when you are using your car for business. If your side hustle means you are driving (even if it’s just to and from gigs), consider adding a commercial auto policy to your insurance package. That way, if there’s an accident while you’re driving while working or commuting for your side hustle, you’ll be covered.
Zammito Insurance is always available to answer your questions regarding business, home office, and auto insurance. Give us a call at (781) 762-6732 to find out more.