Side hustles can be risky business

If you have a side hustle, you may also have an insurance problem.

Whether you’re taking in renters through AirBnb or SilverNest or driving for the likes of Amazon Flex or GrubHub, the personal insurance policy that you have on your home or car is likely to be inadequate. There are several reasons why.

Personal vs. commercial

First, as the so-called gig economy has grown, more and more insurers have started to specifically exclude coverage for “commercial” pursuits. That means your auto insurer may cover you when you drive around for pleasure, but the moment you put a paying passenger in your car, that coverage is void.

Likewise, when you regularly bring renters into your home, insurers posit that you are running a business and businesses are not covered under your standard homeowner’s policy.

Then, too, since the people who ride in your car (or stay in your home) for pleasure are usually your friends, they might be reluctant to sue you if they are hurt in an accident. Not so a renter/paying passenger. So if you have assets that could be put at risk, rethinking your coverage is a must.

Insurance “riders”

On the bright side, the right coverage isn’t tough to find. Some insurers may offer it through a “rider,” which is a simple addendum to your personal policy. However, the more you use your personal assets for work, the more likely you would want to buy more comprehensive coverage.

For instance, if you regularly rent out your home, you may want to spring for something called “landlord” insurance. This insurance not only covers the cost of a paying guest’s medical expenses if they’re injured, it can provide compensation for lost-income if your house is damaged and can’t be rented for a period of time while you complete repairs.

Commercial policies

A landlord’s policy does not cover your tenant’s belongings, however. So, if you have a long-term renter, you may also want to require that person to buy renter’s insurance or sign a waiver, saying that you are not responsible for their personal belongings – nor for finding them another place to rent — in the event that a fire or flood destroys your home and all of the things in it.

Auto insurers may also not cover you if you’re in an accident while driving for pay. Each insurer has different coverages and exclusions, however, so it is wise to talk through your coverage before ever taking a fare. Increasingly, auto insurers will tack a ride sharing rider onto your standard auto policy for just a few extra dollars per year. But some of these policies are pretty limited, so make sure to get the details before you drive. And, if you drive full time, you may need a more expensive commercial policy.

Platform coverage

Notably, some ride sharing services and rental platforms, including Uber and Lyft, provide supplemental insurance. Uber and Lyft’s coverage, for instance, covers your passengers and car, if you get in an accident while working for them. But many ride sharing and delivery companies don’t offer this additional coverage, which means drivers are on their own in the event of an accident.

When you’re considering a side hustle that involves the use of your house or car, be sure to ask whether the site provides insurance. If it doesn’t, that’s an added risk – and added expense – that you should factor into the decision of whether this gig is worth your time.