The side hustle has rewritten the script on how most of us approach work. From freelancing on nights, creating handcrafted goods for sale online, to weekend photography gigs, side hustles have become the go-to way to earn some extra money, gain creative control, and even launch full-time entrepreneurial ventures. But there’s one thing about having a side business that tends to fall under the radar, and that’s insurance.
When you’re starting out, it’s easy to claim, “I’m doing this part-time,” or “It’s not quite a proper business yet.” But the reality is that side hustles carry legal, financial, and operational risks, just like any business. Insurance is not just for big businesses. It’s for anyone exposed to potential claims, even if you’re only earning a few hundred pounds a month.
So, when do you require business insurance for a side hustle? The short answer is whenever you have risk, clients, or income. Let’s break that down.
When Money Changes Hands, You Take On Responsibility
The moment you receive payment for a product or service, you’ve entered the world of something greater than a hobby. With pay, there comes responsibility and liability. When a customer complains, gets injured, or suffers a loss due to your work or product, you could be held financially responsible. That’s whether you work for yourself on a part-time basis or have a full-time business.
Think, for example, of a freelance dog walker. If a dog slips its lead and causes an accident, you could be legally liable for damages. Or if you’re a freelance web designer and a customer sues you for loss to their business due to a bug in your code, you could receive a claim for damages. These types of things don’t wait for your business to “feel real”, they can occur right from day one.
Where You Work (And With Whom) Counts
Your location can also lead to the need for insurance. If clients visit you in your home, or if you visit them, the likelihood of something going wrong increases. Even something as apparently minor as a client slipping on a cord in your home office might lead to a personal injury claim.
Similarly, if you are hiring others to help that you know, like a friend making some deliveries for you or a contractor assisting your workload, you may need employers’ liability insurance, which is compulsory in the UK if you have any employees at all, even on a casual basis.
Even businesses that exist solely online aren’t exempt. If your side hustle entails dealing with personal information, providing professional guidance, or running an online business, then professional indemnity or cyber liability insurance could be a necessity.
Platforms and Clients May Demand It
Yet another important reason why many side hustlers have to think about insurance sooner rather than later is third-party demands. More platforms, marketplaces, and clients are asking for evidence of insurance before conducting business with you.
If you’re hiring out space at a craft fair, for example, the organiser might insist you hold public liability insurance. If you’re hiring out your services to a corporate client, they’ll probably want sight of professional indemnity cover. If you hold classes at a rented premises, the owner will probably want to see proof that you’re insured.
The Cost of Doing Without Can Be Expensive
We understand that when you’re starting out or making relatively modest amounts of money, every penny counts, and insurance can feel like a luxury. But consider the cost of going without.
Legal fees, compensation claims, stolen equipment, and reimbursing dissatisfied customers can all eat into your side hustle earnings and more. And if your personal assets are not kept separate from those of your business (as is often the case with sole traders), your own finances are at risk.
Insurance is more than protection; it’s peace of mind, where you can focus on creating your business without worrying about one bad move destroying all that you’ve accomplished.
So, When Exactly Should You Buy?
There is no easy formula, but the general principle is that the moment your side business involves clients, products, advice, or the public, whether in person or online, it’s time to take business insurance seriously.
If you still have questions, try to answer these:
- Do I provide a service that could be challenged or cause financial harm?
- Do I come into contact with clients or the public in the course of my business?
- Do I produce, store, or ship physical products?
- Do I own expensive equipment that I can’t afford to replace?
- Do I handle client data or work online in a way that could invite cyber attacks?
If the answer to any of those is yes, then some form of business insurance is not just advisable, it’s a wise move.
Why Use Ashburnham Insurance?
At Ashburnham Insurance, we specialise in helping small businesses, freelancers, and side hustlers get the right cover at the right price. We know that no two businesses are alike, and we take the time to understand your situation, whether you’re tutoring maths on weekends, running an Etsy store, or launching a new consultancy from your kitchen table.
We make insurance straightforward, affordable, and flexible. You’ve put in the time to build your side hustle. We’re here to make sure it’s protected. If you’re not sure what kind of cover you need, speak to Ashburnham Insurance on 0800 1696137 to get started. We’re always happy to help you figure it out.