When you are on a limited income and are facing student loan debt, earning more money can be life changing.
That’s why side hustles are becoming increasingly popular. You can make more cash on the side and on your own schedule.
Plus, bringing in more money allows you to pay down debt and boost your savings more quickly.
And, you can launch many side gigs within a few hours. You can look for clients, land a customer, and collect your first payment all in one day.
But while side gigs can be gold mines, many people rush in without doing their homework. Or, paying for some essential insurance. And that can cost you.
Below, we’ll talk about some of the hidden costs around driving for ridesharing apps, dog-sitting, and cleaning houses. These are three common side gigs many people engage in.
Driving for Uber or Lyft
If you drive for a ridesharing app like Uber or Lyft, you may not think insurance is an issue. But according to rideshare expert Harry Campbell, it can be a big problem.
“Uber and Lyft offer full commercial insurance while drivers are en route to a passenger or on a trip, but when drivers just have the app on or are waiting for a request, there’s an insurance gap,” says Campbell.
That issue means that if you are in an accident while waiting for a customer, Uber or Lyft won’t help you. And even if you have personal car insurance, you may be out of luck.
“Personal insurers won’t cover drivers during the rideshare waiting period, and they may even drop you for being a rideshare driver,” says Campbell.
“But a lot of companies are now offering rideshare insurance and the cost is only five to 20 percent more per month and you get full coverage,” Campbell adds.
The Rideshare Guy compiled insurance companies that offer policies to rideshare drivers that cover the waiting periods when you don’t have a passenger.
Getting a policy can give you the necessary protection you need to keep yourself safe and protect your finances in the event of an accident.
There are thousands of sitters willing to watch pets in their homes or their customers’ houses. And it seems like a great gig: you get to play with animals without any startup costs.
But according to professional Jeremy Beam, jumping into pet sitting without doing some legwork to set up your business can destroy your finances.
“So many pet sitters treat it very casually and don’t bother to get bonded or insured,” says Beam. “They think it isn’t necessary because they only watch pets occasionally, or they don’t want to spend the money.”
“But going without insurance can literally bankrupt you,” Beam explains.
He’s met other pet sitters who have found out the hard way. One dog sitter was walking a dog when the pup broke free of its leash and ran out into the road and a car hit it. The sitter was liable for the dog’s medical fees, which totaled over $15,000.
In another case, a sitter was watching a dog in the customer’s home. The owner gave strict instructions that the dog had to be in a crate when no one was home.
But the sitter forgot to secure the crate once, and the dog destroyed an oriental rug worth over $45,000. The sitter had to set up a repayment plan with the owners.
While those cases may sound extreme, accidents happen. An insurance policy can protect you from the unexpected. It can also make customers feel more comfortable about hiring you.
Beam recommends getting a comprehensive policy that will cover veterinarian visits, property damage, and even provide coverage for lost keys.
Most policies cost between $200-500 a year, depending on what services you offer. PetSits.com is a site that compares different pet insurance policies to help you choose the best option for your needs.
Similar to pet sitting, cleaning houses can be an easy side gig to jump into quickly. But just like watching a dog or cat in someone’s home, there’s a lot of risks involved.
When you’re cleaning, mistakes happen. You can knock over a treasured vase, use a cleanser that damages the finish on a piece of furniture or spill something on a customer’s white couch.
And in some cases, these little accidents can cost hundreds or even thousands of dollars to repair.
Additionally, since you have access to someone’s home, you also have some liability issues to consider. If you forget to lock the door after you clean or lose the homeowner’s key, and a robber enters their home, they could hold you responsible.
Insurance can help protect you against the costs of accidents and lawsuits. But it is not cheap. Even if you only clean a few houses, annual premiums can be over $600 a year.
Side gigs: prepare for the worst, hope for the best
Side hustles are a great way to earn money and pay down your student loans or credit cards. But remember, you need to do some preparation before you start taking on gigs.
While you might cringe at spending a few hundred dollars on an insurance policy when you’re just getting started, it’s a wise investment that can protect you.
For more information on how to better manage your side hustle, check out this article here.
Wondering how much money you could save paying off your student loans early? Check out this calculator below to see how making extra money from side gigs can help you pay down your student loan debt.
Student Loan Prepayment Calculator
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Are you juggling multiple side gigs? Share how you manage it all in the comments below!