Having a side gig while maintaining a regular job has become a great way to build up a business and earn extra income. Protecting it with the right insurance coverage could give you an extra layer of protection from any unforeseen circumstances.
Table of Contents
- Why Do You Need An Insurance Coverage For Your Side Gig?
- Different Types of Insurance Coverage for Side Gigs
- What Type Of Insurance Is Needed For Chart Reviews, Expert Consulting, etc.?
- When Do You Need Malpractice Vs. Another Type Of Insurance (Such As Errors & Omissions)?
- Does All Consulting Require Liability Insurance?
Why Do You Need An Insurance Coverage For Your Side Gig?
A side gig or a business may be beneficial for several reasons. You could be your boss, work remotely, set your schedule, and get paid for your services accordingly.
Nevertheless, there are some associated downfalls if you don’t have a subsidized insurance policy. If you provide a service that is susceptible to interruption, lawsuit, or property loss, you will need to protect it with insurance coverage.
Your side gig could be anything. Having the right insurance coverage could give you an extra layer of protection from any unexpected risks.
Different Types of Insurance Coverage for Side Gigs
You should consider any side gig as a “small business” and get insurance coverage. Below are a couple of insurance policies briefly described to give you insight into choosing the right one for your gig.
1. Business Owner’s Policy
A business owner’s policy is a packaged policy that offers the most protection and covers all the basics for a small business. It generally covers professional liability, business interruption, property, vehicle, and crime insurance. You may customize the policy based on your side gig needs and get a separate and more comprehensive policy.
- Professional Liability Insurance: This policy covers claims and lawsuits due to negligence, failure to perform, accidents such as bodily injury, or property damage to a customer, partner, or third party.
- Property Insurance: This policy helps cover unexpected damages in the event of natural disasters, fire, storms, theft, etc.
- Crime Insurance: It offers protection for your property from theft, forgery, and fraud.
- Vehicle Insurance: If you are using your vehicle for business or providing services for a fee, you can opt for comprehensive commercial auto insurance.
The above policies offer protection to your business and personal assets in case of lawsuit or damage. Discuss with an insurance agent about your side gig so that they may find you the best policies with the right amount of insurance coverage.
2. Cyber Liability Insurance
This policy helps your computer systems and software from cyber damage. Someone may hack your system, and confidential data such as client’s personal information, social security numbers, credit card numbers, addresses, etc., may be stolen. In such cases, your clients may sue you for a breach of privacy.
Cyber liability insurance helps cover lawsuits or settlement costs. It may also cover data retrieving, personal and client loss from identity theft, fines/penalties, legal defense, etc.
Data Breach Insurance likewise covers both cyber and paper breaches. Cyber liability offers more cyber protection for a cloud-based company. If your work involves storing data in the computer system and paper-based data, data breach insurance would be the right choice.
3. Personal and Advertising Injury
This policy covers the costs related to copyright infringement, privacy invasion, libel, defamation, intellectual property, etc., in case you are sued. It won’t be covered if another company slanders or infringes against you if you have accidentally done so.
4. Workers’ Compensation
If you have hired at least one individual to help you, you can go for a worker’s compensation policy. It protects you from any lawsuits that may result due to employee injuries during working hours. It also provides medical benefits and employee wage replacement while the employee is out of work due to the trauma. Most states necessitate workers’ compensation for W2 employees.
5. Accounts Receivable
If you are using invoices to get paid for large services and your client doesn’t pay up, you could be at a loss or have a negative cash flow. Accounts receivable insurance helps with the revenue loss by repaying if you cannot retrieve it from the client for whatsoever reason.
The insurances mentioned above are a few among the most popular ones. If you have a side gig or intend to start one, it is important to do extensive research on various insurance policies that fits your side gig to protect yourself and your assets.
What Type Of Insurance Is Needed For Chart Reviews, Expert Consulting, etc.?
Physicians intending to start or having a side hustle outside their primary practice setting should weigh the liability issues. One can prepare themselves for unpredictable eventualities by choosing professional liability insurance. It is also known as Malpractice Insurance and Errors and Omissions Insurance depending on the work chosen.
This insurance policy protects you if a client lodges a liability lawsuit in case you caused them financial harm and didn’t live up to your professional obligations. Hence, professional liability insurance offers protection for your business against any claims such as general negligence, unintentional mistakes, violations of good faith, and inaccurate advice.
Before opting for professional liability insurance, you must also check your state’s rules since some industries provide coverage. As an independent service provider, you must evaluate your risk exposures and consider coverage since you may not have the financial resources in the event of litigation.
When Do You Need Malpractice Vs. Another Type Of Insurance (Such As Errors & Omissions)?
The magnitude of risk and liability in your side hustle greatly depends on the kind of service you provide and the tasks performed. One should bear in mind the risk isn’t based on the chances of you losing a lawsuit but rather the prospect of a client filing a liability lawsuit against you. Defending against a lawsuit can impact you financially and certainly drain your bank account.
Malpractice Insurance is also referred to as professional liability insurance for medical and legal professionals. It is crucial for people who provide healthcare services, such as nurses, opticians, dentists, physical therapists, etc., to have this coverage. It protects the healthcare professionals against allegations of negligent acts causing harm to the patients.
According to the situation, the malpractice insurance policy can be purchased for an individual or a group through a private insurer or state and local agencies if deemed necessary. Before purchasing, you must explore and understand what the policy offers. Look for the policies that give you the maximum coverage and also that covers defense outside the limit.
Errors and Omissions (E&O) Insurance is a kind of commercial liability coverage. It shields your business against allegations arising from negligent acts or failure to provide proper service or advice. Any business professionals such as physicians, computer consultants, architects who provide service or advice for a fee may be exposed to professional liability claims.
Opting for professional liability insurance may help cover litigation costs, settlements, and judgments if a client sues you for a professional service mistake.
Does All Consulting Require Liability Insurance?
A small dispute with the client can result in a professional liability lawsuit. A case might be filed for negligence even if you didn’t commit any errors.
Lawsuits can be expensive, and many independent consultants don’t have financial support or a legal team to stand by. Hence, Professional Liability Insurance provides coverage for defense costs and other legal fees.
Professional liability claims can be filed in the instances of perceived or real work errors by a consultant, such as:
- Improper documentation
- Loss of data, negligent handling of data, improper procedures
- Missed deadlines
- Breach of nondisclosure
- Misrepresentation of facts
- Failure to prevent a data breach
To protect your service and assets, start by assessing the risks involved with the type of work you do and choose the right professional liability insurance that shields you from any financial loss.