You’re a dreamer, doer, or DIYer ready to make money doing what you love. Starting a side hustle gives you the freedom to become your own boss and create a business that’s entirely yours.
But no one ever said growing a side hustle is easy. And insuring your side hustle? Well, you may have never even thought about it! Here’s why getting side business insurance is just as important as believing in the financial freedom you’re creating.
Side Hustle, Real Risk: Hidden Liabilities You Haven’t Considered
Side Hustle: Work performed for income supplementary to one’s primary job.
Whether you sell handmade candles or teach sun salutations, your side hustle is a business. And with every business, because it interacts with the public, comes risk.
Insuring your side hustle is like casting a wide safety net against all the hidden liabilities you’ve yet to consider. Here are just a few scenarios that illustrate the risks that come with running your business.
Your Products Causing Client Harm
Say you’ve started selling your one-of-a-kind resin jewelry at a local weekend market. It’s so exciting seeing attendees marvel at your creations, but one day, a customer sends you an angry email claiming they’ve suffered a severe skin rash due to your product.
They claim you failed to properly disclose the materials used and expect you to make things right immediately.
A Student Getting Injured During Class
Perhaps your side hustle is yoga instruction. You teach classes after your day job, and it’s a rewarding experience seeing students grow in their wellness journeys.
However, things take a bad turn when a student slips and falls on a puddle of water in your rented studio, resulting in a broken wrist and a total disruption of flow.
Because it happened where your business operates, your student holds you responsible for their medical bills and lost wages.
You’re Unable to Deliver What’s Promised
Maybe you’re a wedding photographer, capturing beautiful moments the happy couple will cherish for a lifetime. That is, until you discover your SD card is corrupted, and the majority of the photos are unrecoverable.
The bride demands a refund, sues for emotional distress, and blasts you on social media. If you’re ever unable to deliver your professional services or the final product, you can be held liable — you accepted the payment, but the client didn’t receive what was promised!
Your Operations Damaging Client Property
Imagine your side hustle is cleaning homes. During one job, you accidentally knock a bottle of cleaning solution onto a custom wood coffee table, leaving a permanent stain. Your client demands that you pay to replace the piece, which happens to be a few months’ worth of your earnings.
Even though it was unintentional, your business caused the property damage, and it’ll be on you to make amends to the client.
“At a corporate gig in a Chicago loft, our setup was near a table covered in candles and fabric. I flagged it, they ignored it. Mid-set, a guest knocked over a candle, and another guest got burned. The venue pointed at me. The planner pointed at me. I had signed the contract directly and had no legal protections written in.
Good thing I had liability insurance. It covered the injury and the legal mess. The bill came to nearly $14,000. If I didn’t have coverage, I’d have paid out of pocket.
If you’re making money, even on the side, you need protection. It doesn’t take much to turn a simple gig into a disaster.” – Steve Nixon, Founder of freejazzlessons.com
A Competitor Accusing You of Copying Their Material
Maybe you perform music on the side. And, of course, you’re on Instagram to help build a fanbase and promote your side hustle. You have a new gig coming up, so you post a digital “flyer” with all the details.
But then comes a hostile DM from another local musician, claiming you’ve stolen the graphic design of their promotional materials. They say they have receipts and threaten to sue for intellectual property (IP) infringement and the hit to their reputation.
In all of the above scenarios, your side hustle can be legally responsible for paying to make things right. That includes medical bills, legal fees, and damages awarded — lots of money!
Most side hustlers can’t afford to pay all of that on their own. That’s why it’s essential to carry small business insurance. It’s about being optimistic about your side hustle’s potential, while staying realistic about risks that threaten to derail all you’ve worked for.
Insurance Needed to Start a Business as a Side Hustle
Just like a guitarist uses different pedals to shape their sound, or a makeup artist reaches for specific brushes to nail that just-right blend, your side hustle runs on a toolkit built for many uses.
Insurance works the same way. Different types of coverages protect you from the different risks you face, whether you’re selling products, offering services, or working with clients in person.
General Liability Insurance
General liability insurance is designed to cover injuries or property damage to third parties, usually clients or customers, in relation to your side hustle. So, if a student slips and falls during a class or your equipment damages a client’s things, you’d be financially protected if they make a claim against you.
Think of this coverage as a blanket of protection against general accidents whenever your side hustle is active.
The following coverages get more specific in their scope.
Professional Liability Insurance
Professional liability insurance hones in on your professional services and can cover claims alleging you’ve made a mistake or failed to deliver. Your side hustle is built on your particular skill, talent, or expertise — this coverage protects that part of your business.
Did you know a client can take legal action against you even if you didn’t do anything wrong? Say you’re an artist unveiling a commission piece that took you hours to complete. The client says you’ve got it all wrong despite your careful attention to their instructions. Professional liability insurance could kick in to cover a dispute like this.
Product Liability Insurance
If your side hustle involves selling products, product liability insurance is a non-negotiable. This coverage is made to protect your business financially if your products accidentally cause harm. It’s particularly essential for creators and sellers of handmade or food and beverage products — goods that have a higher chance of harming customers after the sale.
You never know when someone might have an allergic reaction to one of your baked goods. Or your scented candle might burn unevenly due to a faulty wick and cause a small fire in a customer’s home.
Product liability insurance enables you to sell your products confidently, knowing you’re covered from “what-ifs” like these.
Cyber Liability Insurance
Do you accept payments online? Do you store client information in the cloud? By doing so, you’re at risk of cyberattacks on your side hustle, with sensitive client data vulnerable to theft. Cyber liability insurance is coverage for the aftermath of data breaches like these.
This insurance coverage helps notify customers of the incident, pays for credit monitoring, and covers damages to make things right.
It’s hard not to do business online, but it comes with real risks you must be prepared for.
Inland Marine (Tools & Equipment)
Inland marine is coverage for your business property in case of theft or damage. You rely on your tools and equipment to keep your side hustle running smoothly, but if something happens to these essentials, you can lose out on business!
Inland marine can pay to repair or replace things like movable supplies, inventory, business tech — as long as it’s not permanently installed at your place of business.
For a musician who spends thousands curating their gear or the makeup artist with a comprehensive kit, this coverage goes a long way in ensuring they’re never unable to operate their side hustle.
Liquor Liability Insurance
If your side hustle involves selling or serving alcohol, you need liquor liability insurance. This coverage is designed to protect you against alcohol-related claims, such as if you accidentally overserve a guest who later causes a car accident.
There’s a lot of responsibility in serving drinks, plus most states have dram shop laws that hold you liable for damages caused by intoxicated patrons or for alcohol served to minors. Liquor liability insurance gives you peace of mind with every pour.
Pro Tip:
Scaling your side hustle with employees? You might need to offer workers compensation insurance per your state’s laws. Insurance Canopy grows with your business through every step!
Myths About Insuring a Side Hustle, Debunked
You’re researching how to level up your side hustle, you’ve got a million tabs open, just trying to make sense of where the heck the noise is coming from. Yes, understanding small business insurance can feel a bit like that.
Let’s quiet those myths about side hustle insurance for good.
🤏I don’t need insurance — my side hustle is too small
Sorry, but a scorned client doesn’t care about how big your side hustle is. If they feel wronged by your business, they’re entitled to take legal action against you. Yes, even if your business is just you, trying to turn your hobby into something real.
🏡My homeowners or renters insurance covers my side hustle
Nope, homeowners or renters insurance policies typically do not cover business-related claims. If you run an Etsy shop from home or hold personal training sessions in your garage, you need dedicated business insurance to cover your liabilities and business property.
💸Small business insurance is too expensive
Small business insurance is far less expensive than a liability claim, which can run you hundreds of thousands of dollars. It’s an added business expense, yes, but it can save you big in the long run.
📃I have an LLC, so I’m already protected
Forming an LLC is a great way to protect your personal assets, but the business structure doesn’t prevent a client from suing you should something go wrong.
Your business account will still be on the hook to pay for your defense and potential settlement fees. The only distinction is that they won’t be able to draw from your personal bank account or property.
🪅I only work at events or on the weekend, and the risk is low
Accidents happen. Risk doesn’t check your calendar, either! Even a two-hour pop-up event can result in a nasty slip-and-fall or a product defect claim. You simply never know when things can take a turn for the worse, and it’s smart to be prepared.
🫱🏼🫲🏽I don’t need insurance until a client asks for it
By the time a client, event, or landlord asks you for proof of insurance, you could be scrambling to get coverage. Proactively having small business insurance gets you gig-ready — you never know when your big break could come knocking.
“I started as a face painter in college in 2011 and didn’t even realize insurance would be an issue. Embarrassingly, the first time I was exposed to the idea was when I was a few years in and finally working with my first corporate client (a financial firm looking to hire me for an event series). It would have been my biggest contract to date at the time, but when they asked for insurance, I didn’t know what they meant, and I lost the contract.
Everything you’re working hard to build is at risk if you are not properly insured. It isn’t a ‘for when I need it’ gamble, it’s a ‘so I don’t need it’ investment.” – Marissa Blaszko, Owner of Kaleidoscope Artistic Entertainment
How Insurance Is an Asset to Your Growing Business
Your side hustle could take you from part-time hobbyist to full-fledged freedom. Here’s how insurance supports your vision.
- It’s often required by clients or venues. Proof of insurance is typically required when you sign work contracts. And if you don’t already have it, your opportunity could go sailing away … straight to your competitor.
- It enhances your professional credibility. A side hustle? A dime a dozen. An insured side hustle? That shows you take your business seriously, from day one, and that builds trust with potential clients.
- It gives you peace of mind to focus on doing what you love — not on the risks. Getting covered empowers you to do your best work, rather than worrying about claims that can squash your side hustle before it even takes off.
- It’s protection that scales with you. You may be small but mighty — but soon you could be big and mighty. As your business grows, the right insurance is designed to keep more of your sales in your pocket, so you can reach new heights worry-free.
“Don’t wait for a crisis to force your hand — shop for business insurance before the ‘what if’ becomes a costly reality. And don’t just default to the big-name insurers. Look for niche providers who specialize in covering small businesses and side hustles — they often understand your unique risks better and offer more affordable, tailored coverage.” – James Powell, Business Coach and Founder of humanKIND
Benefits of Insuring Your Side Hustle With Insurance Canopy
So, where to get insurance needed to start a business (as a side hustle)? Insurance Canopy specializes in protecting small businesses, from startups to sole proprietorships. We actually started as a small business, so we get it.
Get coverage that’s:
✔️Easy, as in just-a-few-clicks easy
✔️Affordable, because you have enough business expenses
✔️Fast — ready-to-buy policies or 24 hours for a custom quote
✔️Supportive, with licensed agents on standby to help
✔️Tailored to your business niche
✔️Backed by top-rated carriers
FAQs About Insuring a Side Hustle or Startup
Can You Legally Run a Side Business Without Insurance?
How Much Does a $1,000,000 Side Business Insurance Policy Cost?
With Insurance Canopy, side business liability insurance with a $1,000,000 occurrence (per-claim) limit for general liability averages about $20 a month! Depending on your side hustle, you can get comprehensive coverage for just a little more than your monthly streaming service.
What’s the Best Insurance for a Side Hustle or Startup?
The best insurance for a startup or side hustle depends heavily on what you do. Most side businesses start with general liability, but you may also need professional liability, product liability, or inland marine coverage depending on your services, products, and equipment.
Insurance Canopy bundles these coverages for many popular side hustle types with straightforward pricing. Find your industry to learn how we can protect your small business.
JoAnne Hammer | Program Manager
JoAnne Hammer is the Program Manager for Insurance Canopy. She has held the prestigious Certified Insurance Counselor (CIC) designation since July 2004.
JoAnne understands that starting and operating a business takes a tremendous amount of time, dedication, and financial resources. She believes that insurance is the single best way to protect your investment, business, and personal assets.
JoAnne Hammer is the Program Manager for Insurance Canopy. She has held the prestigious Certified Insurance Counselor (CIC) designation since July 2004.
JoAnne understands that starting and operating a business takes a tremendous amount of time, dedication, and financial resources. She believes that insurance is the single best way to protect your investment, business, and personal assets.
