Month: February 2024

As inflation continues to take a toll on household budgets across America, more workers are considering picking up a second job to help make ends meet. Unlike part-time employment, a side hustle allows an individual to retain control over the work they do and the hours they devote to it. These ventures can include tutoring, dog walking, video editing, rideshare driving, and countless others. In fact, a recent study from Fiverr found that 74% of American workers plan on starting or continuing a side hustle in 2024. ^*

As individuals take on side hustles to generate more income or out of a desire to operate their own businesses, they also take on risks. If you are considering adding a side hustle to your income stream, the first thing you need to understand is what risks are not covered by your existing insurance policies. While your current home and auto coverage may offer some protection, even the smallest side hustle could severely damage an individual’s finances without the appropriate insurance policies in place.

Liability Insurance

Your homeowners policy likely includes liability insurance in case someone gets injured in your home. However, the coverage does not typically extend to a home-based business. If a client slips and falls while visiting your home office, your home insurance may not cover the resulting medical or legal expenses should that individual decide to sue. Additionally, if you are renting out a room or your entire home on an app like VRBO or Airbnb, coverage may be excluded for any losses. 

Cyber Insurance

If your side hustle relies on technology to collect payments or customer data, it is wise to consider purchasing cyber insurance. In the unfortunate event that a hacker steals your customers’ credit card data, would you be able to recoup your losses? Cyber insurance can protect you and your business in the event of a data breech, whether your computer is hacked or your phone containing sensitive information is stolen.

Auto Insurance

Some automotive policies are for personal use only, while other may cover a business-related accident with limited coverage. If your side hustle involves driving and you get into an accident, do you know whether your insurance will cover you? If you are employed as a rideshare or delivery driver, you need to know whether the company’s insurance covers you and what the limits are for collision, liability, and medical.

Fire Insurance

Your existing homeowners policy likely provides coverage for losses incurred in a fire. However, that protection may not extend beyond your personal belongings. If you run a business out of your home, you may want to consider purchasing additional coverage to protect expensive office equipment or your business inventory in the event of a fire.

Regardless of the nature of your side hustle, adding on the right insurance policies can help keep business running smoothly. At South Carolina Federal Insurance Solutions, experienced advisors can help you evaluate your side hustle, assess your existing coverage, determine where your personal coverage ends, and identify gaps in your business coverage. Contact us today to get started!

^* Fiverr reveals top side hustles for 2024

Insurance plays a vital role in the day-to-day lives of nearly all Americans. As consumers, we invest in insurance policies to protect against financial losses due to unforeseen events, such as natural disasters, accidents, or illnesses. However, despite being a highly regulated industry, some insurance carriers ultimately end up failing.

What causes insurance carriers to fail?

Many factors can contribute to an insurance carrier going out of business, including regulatory changes, poor management, or falling victim to fraud. Sometimes, carriers receive an unprecedented number of claims following a catastrophic event, leaving them unable to pay out policyholders – this happens more often in states prone to severe weather such as hurricanes and tornadoes.

Regardless of the reason, all 50 states have systems in place to protect policyholders in the event an insurer goes out of business.

How are policyholders protected?

In order to obtain a license to sell insurance in a particular state, an insurance carrier must participate in the state’s guaranty association and pay into a guaranty fund. Guaranty funds are regulated by state law and serve to pay out active claims that an insurance carrier is unable to fulfill should they become financially impaired. However, it should be noted that many states, including South Carolina, only cover claims up to $300,000. To learn more about the South Carolina Guaranty Association, visit scguaranty.com.

It is possible for an insurance carrier to sell policies through a broker in states where they are not licensed. Commonly referred to as “non-admitted carriers,” these carriers are not required to follow the same state regulations as licensed or “admitted” carriers. Non-admitted carriers offer flexible policies that may be considered too complicated or too high-risk for state-backed carriers. However, it is important to know that claims on these policies will not be paid out by the state if the insurance carrier fails.

Will I be notified if my insurance carrier goes out of business?

Once an insurance carrier decides to cease operations, policyholders will receive notification alerting them of the closure and be given a date which their policies will be cancelled. Those with an open claim will be contacted by the state guaranty association with additional instructions on how to proceed.

What happens next?

If you are notified that your insurance policy is being cancelled due to the carrier going out of business, remember these tips:    

• Don’t panic! If you have an active claim, insurance guaranty funds are designed to protect policyholders if an insurer is incapable of paying.
• It is imperative that you continue paying premiums to keep your coverage intact while you search for another insurer. This is especially important if you have an open claim.  

Before you shop around for a new policy, contact your South Carolina Federal Insurance Solutions advisor. Our experienced advisors stay up-to-date on carriers entering and exiting the local market and can help you find the best policy for your personal needs and budget.