Do I need insurance for my side hustle?

With the rising cost of living, it’s not surprising that many Canadians are looking for ways to make extra money.

If you’re thinking about starting a side hustle, you’re not alone. Side hustles, also known as gig work, are becoming increasingly popular. A recent study by H&R Block Canada Inc. found that 28% of Canadians, nearly nine million people, are now doing gig work, up from 13% in 2022. Another 12% are considering it.

Having a side hustle means managing many things full-time employees don’t have to worry about, like tax planning and insurance. Both of these are crucial to avoid financial surprises and ensure your side hustle is successful and profitable.

Insurance is vital for everyone, but especially for those with side hustles. Whether you offer professional services, run an online store, or work from home, the right insurance can protect you from liabilities and unexpected events. It helps keep your side hustle safe and thriving.

Do I need insurance for my side hustle? 

Business insurance is meant to protect you, and extra protection is never a bad thing. Many side hustles, like offering professional services or running an online store, come with liabilities, making side hustle insurance something to seriously consider. 

For example, if you provide advice or services, professional liability insurance is crucial to cover potential claims against you. Contractors, fitness trainers, photographers, and consultants can all benefit from this coverage to protect against client claims of financial loss or harm. If you sell products, general liability insurance can cover injuries or damages caused by your products.

Home-based businesses also need insurance. Your regular home insurance might not cover business activities, and without proper coverage, you could face significant out-of-pocket expenses if something goes wrong. Adding business coverage to your home insurance can protect your equipment and operations, including coverage for property damage or theft and liability for accidents that occur in your home business space. This is essential for side hustles like online stores, home-based baking, or crafting businesses.

Beyond liability and property coverage, health and life insurance are also important for side hustlers. Many traditional jobs offer these as group benefits, but if you're relying on gig work for your income, you need to secure these protections yourself.

Types of business insurance for side hustles

When running a side hustle, it's important to know about the different types of business insurance available to protect you. Here are some key types of coverage to consider:

1. Commercial general liability (CGL): This covers third-party claims for bodily injury, property damage, and personal injury. It's essential for side hustles like dog walking, snow plowing, and fitness training.
2. Professional liability: Also known as errors and omissions insurance, this protects against claims of negligence or inadequate work. It's crucial for consultants, photographers, contractors, or tax preparers (like the one we’ll discuss below).
3. Product liability: If you sell products, this insurance covers claims related to product defects causing injury or damage.
4. Cyber liability: This covers losses from data breaches and cyberattacks, which is vital for online businesses and e-commerce stores.
5. Home-based business insurance: This enhances your home insurance to cover business-related equipment and activities, perfect for home-based bakers, crafters, and online sellers.

Each type of insurance addresses specific risks, ensuring your side hustle is protected from a range of different issues. It's always a good idea to evaluate your business needs and consult with an insurance advisor to determine the right mix of coverage.

How much does insurance for side hustles cost?

The cost of insurance for side hustles depends on many factors, all related to the level of risk associated with the business. Insurance companies evaluate the risks of your side hustle and use this information to set the premiums you will pay as the policyholder.

Each type of side hustle carries its own unique level of risk. For example, a personal trainer who works in clients' homes faces different risks compared to a dog walker or a tax preparer. The higher the perceived risk, the higher the insurance cost.

According to our partner APOLLO, here are some examples of side hustle insurance costs:

• Dog walkers are a relatively low risk for insurance providers. A dog walker in Ontario with $1 million in general liability and $5,000 liability per animal will pay $168.30 per year.
• Personal trainers are also relatively low-risk, especially when they are training clients in the client’s home. A personal trainer who trains at other people’s homes and needs $2 million in liability coverage will pay $477.68 per year.
• Doing other people’s taxes can be a lucrative side hustle, but you could face liability if you make a mistake that causes your client some trouble. A tax preparer with $1 million in liability and a $1,000 deductible will be charged premiums of $1,744 per year.

Life and health insurance for side hustlers

Gig workers, or people with side hustles, often focus on business insurance, but it's equally important to consider life and health insurance. 

Health insurance helps cover medical expenses, from routine check-ups to emergency treatments, reducing out-of-pocket costs. Life insurance provides a financial safety net for loved ones, ensuring they are taken care of if something happens to you. This is especially important for gig workers who rely on their side hustle as their primary source of income. 

Unlike traditional employees, gig workers usually don't have access to employer-provided benefits. This means they need to secure their own coverage to protect against unexpected health issues and make sure their families and loved ones are taken care of if they die.

Having comprehensive life and health insurance gives peace of mind and financial stability, enabling you to focus on growing your side hustle without worrying about unexpected personal risks.

Also read: Life insurance for freelancers and self-employed workers

The bottom line

Prices are constantly rising in our current economy, making everything more and more expensive. This makes protecting your finances more important than ever. Insurance is a key part of this protection, especially for those with side hustles. It helps cover risks and liabilities, ensuring that unexpected events don't sidetrack your efforts to get ahead.

By investing in the right insurance, you're safeguarding your hard work and future earnings. Whether it's business, health, or life insurance, having comprehensive coverage provides peace of mind and financial stability. 

Also read

• Is business insurance tax deductible in Canada?
• Is it illegal to not have business insurance?
• How to insure your e-commerce business
• The best business credit cards in Canada