Protecting Your Side Hustle and Personal Finances with Business Insurance
As a freelance writer expanding into organizing in-person events and selling stickers, the question of whether to invest in business insurance arises. Even with modest earnings from these new ventures, the cost of insurance can be daunting. However, according to Jovan Johnson, a CFP® and cofounder of Piece of Wealth Planning in Atlanta, business insurance is crucial for protecting personal assets.
“All it takes is one lawsuit, and you could potentially lose your personal assets,” Johnson warns. “The coverage is more valuable than your monthly premium. You’re protecting your personal assets and your family.”
Four Types of Business Insurance to Consider
- General Policies for Shielding Personal Assets Any business operation that serves customers carries inherent risks, including potential lawsuits. A business insurance policy can safeguard personal assets and family should legal issues arise from incidents like office damage or customer injuries on-site.
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Commercial Auto Coverage for Business Deliveries If you use your car for business purposes, such as food delivery or driving to clients’ homes, commercial auto insurance can cover damages to your vehicle, bodily harm, or property damage to others. It can also address medical bills for you and your passengers.
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Cybersecurity Insurance for Customer Data For online businesses or those handling sensitive customer information, cybersecurity insurance is vital. Cyberattacks, including malware, phishing, and ransomware, pose significant threats. A 2024 U.S. Chamber of Commerce survey found that 60% of small business owners consider cybersecurity threats a top concern.
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Short-term Policies for Seasonal Businesses Consider a short-term policy if your side hustle is seasonal or you need coverage for a one-time event. This can protect you against liabilities arising from events or specific business activities.
Assessing Your Business Insurance Needs
To determine the right business insurance, start by understanding your business type and industry. Johnson recommends researching and consulting with colleagues in similar fields to grasp the specific coverage needs.
Key types of business insurance include:
- General Liability: Covers costs related to bodily injury, property damage, or advertising injury.
- Business Owner’s Policy (BOP): Combines liability and property insurance, suitable for businesses with physical locations or inventory.
- Professional Liability (E&O): Protects against lawsuits claiming mistakes or negligence in professional services.
Consulting with a financial professional can help assess your specific needs. Even your day job might offer free or low-cost financial coaching to understand insurance basics.
By taking these steps, you can ensure your side hustle is protected, safeguarding both your business and personal finances.
