Temporary Business Insurance: Short Term Business Insurance

Business insurance by the month, day, or month – temporary insurance, may be a good option for self-employed casual workers who probably do not have enough continuous business activity to justify full insurance cover for a whole year.

Disclosure: Most of the insurance companies featured in our links do not offer short-term insurance policies.

There are so many opportunities now for short-term casual business activities that can earn good money without having to dedicate a full working schedule.

It is attractive for younger families where children have started schooling, so moms or stay-at-home dads now have time to spare occasionally and find productive and lucrative work in many occupations.

The same goes for mothers whose kids are now enrolled in child-care or kindergarten and have now got several hours to spare, but only while schools are active.

Taking this time and turning it into money-earning activity has become a considerable part of the new economy. Still, they can’t take on part-time jobs because there are weeks or even months when the family commitments overtake the need to earn some extra cash.

Much the same goes for people who have now been able to shift over to home-based work because of the COVID pandemic.

Now there are many hours every day that can be used for secondary activities without taking anything away from the main income-earning job. It’s a win-win situation.

Another effect of the pandemic has been that many highly trained specialist workers have been laid off from full-time jobs, and their employers may never come back to them.

It’s been relatively easy for them to set up a home-based operation that provides skilled services on a job-by-job or short-term contract basis. They need to match their business cost with the timetable that they are working to, so that no unnecessary expenses are incurred.

As well, there are dozens of new kinds of casual work that require no full-time commitment, and that can be organized to be periodic.

Some of the more popular casual jobs are:

• Dog walking and pet sitting
• Computer repairs and installation
• House painting
• Catering and event organizing
• Event photography
• Home repairs
• Roof and fencing repairs
• Carpentry, furniture polishing
• Office fitting
• Shopfitting
• And the list could go on and on.

Let’s illustrate how it may be working for some of these jobs. Suppose you’re offering your services as a shopfitter to a contractor putting up a shopping complex.

He will only give you the job if you have proper public liability insurance, but your part of the work will take only a few weeks in total and it’s divided into short spurts of one or two days at a time spread out over 3 or 4 months. Even if your customer didn’t insist, you certainly should have proper coverage to protect you while on the job.

But if this is the only contract you have for the period that he wants you, then you don’t want to have to pay for a whole year, or even a shorter block of time if you can avoid it.

This is when temporary handyman insurance works for you. You can take out cover for the days or weeks you’re working onsite because short-term liability insurance for handymen keeps you covered over that specific timeframe or activity.

Another example – if you run a business as an event planner, you only need cover for the actual event period, with a few weeks on either side to protect you during the set-up and take-down works. What you need is a policy that can be scheduled to start on a specific date and run for a nominated number of days.

There’s another whole class of short-term insurance for truck drivers and car carers, who may need short-term commercial insurance not for day-to-day trips but for temporary coverage when moving the vehicle for some extra-curricula purpose.

For example – if a company has purchased a new truck and needs someone to collect it from the supplier and move it inter-state to its offices. In this case, normal vehicle insurance doesn’t cover you in terms of public liability, so you may need to buy cover for a few days while you and the truck are in transit.

Working for Payment Means Business

A key feature of all of these activities is that even though they are organized on a temporary basis, as soon as you start to offer services for monetary reward, you open a whole new world of possible financial risk. You should seriously look at how you can get some level of insurance against loss.

There may be a case where some accident occurs and the customer you are dealing with suffers some injury or damage and sues you.

Another possible risk comes from the loss or theft of the equipment and tools that you have invested hard-earned savings in so that you can start your new business.

Every business faces risks like these, and the standard practice is to take out insurance cover for all possible types of events that could cost the business money.

The problem here is that most insurance companies sell their cover on an annual basis and calculate the premium for their policy to cover their exposure over 12 months.

For casual and part-time business work, the cost of a full year’s cover may not be justified, but that could lead you to make a bad decision to ignore the risks just to save a few dollars when the possible damages if something does go wrong, can be massive. If a court decides against you, the settlement could run up into tens of thousands of dollars or even more.

Short Term General Liability Insurance:

Public Liability Insurance: Public liability insurance is crucial for protecting businesses against claims of accidental bodily injury or property damage during business activities. It typically covers bodily injury, property damage, legal defense, and medical payments, with standard coverage limits often reaching $1 million per claim.

Here’s a list of common industries that often require temporary business insurance:

1. Event Planning: For specific events like weddings, conferences, or festivals.
2. Construction and Handyman Services: For short-term projects or specific jobs.
3. Freelance Professionals: Such as photographers, graphic designers, and consultants working on a project basis.
4. Retail Vendors: Especially those operating in seasonal markets or pop-up stores.
5. Catering and Food Services: For catering specific events or operating food stalls at fairs and festivals.
6. Artists and Craftsmen: Including painters, sculptors, and other artists showcasing at exhibitions or fairs.
7. Home-Based Businesses: Such as baking, craft-making, or tutoring services, operating occasionally.
8. Transportation and Delivery Services: For temporary or seasonal delivery services.
9. Entertainers and Performers: Musicians, DJs, and performers working gigs.
10. Fitness Instructors and Personal Trainers: Offering classes or training sessions at various locations.

Examples:

• Handyman Liability Insurance: This insurance is vital for short-term jobs, covering accidental bodily injuries caused during work.
• Dog Walking Business Risks: Covers liabilities if a controlled dog causes injury, protecting against substantial legal costs.
• Professional Liability for Part-Time Ventures: For activities like animal care during summer breaks, it’s essential to have liability insurance to cover the associated risks.

This revised section would provide a more detailed understanding of general liability insurance, specifically addressing public liability, temporary coverage, and various professional scenarios.

Short Term Business Insurance Types

Short Term Equipment Insurance

Even the most casual kind of business requires some special equipment. There are two main types of equipment insurance you should think about getting, depending on your kind of business activity and also on the kind of equipment you are using.

Firstly, equipment replacement in case of loss, theft or damage by fire or storm. Secondly, equipment breakdown insurance, which can pay for repairs to specific larger or more expensive equipment.

The common term ‘equipment’ describes tools of any kind that are being used at work. This can range from small hand-held drills and saws all the way up to fancy computers, 3D printers, lighting and sound equipment and much more.

Let’s take an example of a casual photographer who works on weddings and bar mitzvahs.

Each job occurs on a specific schedule, and you may only be working for 10 or 20 days in the year. It makes sense then to only take out insurance for the days when you are actually on the job.

You need both public liability insurance to protect from the possible accidents that you could cause. You need equipment insurance because you will have your expensive cameras, lighting equipment, sound equipment and whatever else you need to do the work.

This will be located in an area where it is vulnerable to many different kinds threats. If you’ve set up your video camera and the stand gets knocked over, that can cost you thousands of dollars to replace, and you need it immediately otherwise you can’t finish the job and so you’ll need to fork out immediately or risk a double loss.

As well, your valuable gear is now outside of your immediate control, and could be misplaced or stolen.

Equipment insurance lets you take on the work with the assurance that unforeseen events don’t end up costing you more than you would ever have earned from your part-time job.

The good news for you is that because you are working to a predetermined timetable, you can arrange to have insurance coverage just for the times when you are working, instead of wasting money paying annual premiums covering times when you do not need cover.

The bottom line is that any form of temporary work opens you up to risks, and you must take out enough insurance to cover this or you risk uncontrollable losses.

Short-Term Public Liability Insurance

Overview:
Short-term public liability insurance is tailored for businesses and individuals engaging in temporary, project-based, or seasonal activities. This type of insurance is crucial for protecting against claims of accidental bodily injury or property damage that might occur during business operations. It’s particularly useful for events, pop-up stores, short-term construction projects, or any business activity that isn’t permanent.

Benefits:

• Risk Management: Provides immediate coverage for specific short-term periods, mitigating the risk of large financial losses from lawsuits.
• Cost Efficiency: More affordable for businesses that do not require year-round coverage, avoiding the cost of a long-term policy for short-term exposure.
• Flexibility: Can be tailored to the specific timeframe of the project or event, ensuring coverage is in place exactly when it’s needed.

Challenges:

• Coverage Scope: May offer more limited coverage compared to long-term policies.
• Premium Costs: While it saves money over long-term policies, the per-day cost can be higher, which might not be economical for longer projects.

Ideal for: Event organizers, temporary retail setups, short-term construction sites, and anyone needing quick, effective coverage for public interaction within a limited timeframe.

Short-Term Commercial Auto Insurance

Overview:
Short-term commercial auto insurance offers a flexible solution for businesses and individuals who use vehicles on a temporary basis for specific business tasks. This could include renting a vehicle for a short-term project, using a personal vehicle for a business task temporarily, or operating a commercial vehicle for a specific period without the need for continuous insurance coverage.

Benefits:

• Flexibility: Policies can be activated for as short as a single day or for several months, aligning perfectly with the specific needs of the business task.
• Immediate Coverage: Quick to set up, this insurance type is ideal for sudden business needs where a vehicle is involved.
• Cost-Effective: Avoids the financial burden of a long-term policy when the vehicle is only needed for a short duration.

Challenges:

• Cost Variability: Frequent transitions between short-term policies can become costly.
• Coverage Limits: Short-term policies may have stricter coverage limits or not offer as broad a protection as long-term policies.

Ideal for: Businesses needing temporary transportation solutions, such as moving goods to a temporary location, short-term vehicle rental for business trips, or using a vehicle for a specific business event.

Professional Liability Insurance by the month

Professional liability insurance and Errors and Omissions insurance (E&O) by the week may be available from some companies that already offer short term and temporary insurance for general liability, but it is not a common option because the insurance company has to do a lot of background work to extend such cover and it would push the premiums up considerably.

You could perhaps find companies that can tack a PLI or E&OE clause onto a temporary business owner policy but expect the costs of the extra cover to be high.

FAQ for Short Term Business Insurance

What is temporary insurance coverage?

Temporary insurance coverage is a policy that provides insurance for a nominated time period, which could range from a single day through a week, a month or several months. There are individual policies for each type of insurance, such as public liability, general liability, equipment etc.

Why is temporary insurance so expensive?

Every insurance company loads its policies with “front-end” costs relating to the expenses that it has to carry in administration, like creating, marketing, registering and processing the policy and any claims that arise from it.

This means that a policy for one week starts off with a “base” premium of 10-15% of a standard annual policy even though it’s only giving 2% of the actual risk cover.

Think of what happens when you hail a cab. Immediately, the “flag-fall” charge starts at a few dollars, and you then pay on top of that for the mileage and time.

Insurance policies come with a built-in “flag-fall” cost that is the same regardless of the length of the coverage. You only begin to notice it when the period of coverage is very short, like a day or week or month, so that the difference between the cost and the period of cover becomes a factor.

Can you get business insurance for a day?

Business insurance by the day is a special sector of the commercial insurance market. Not all companies offer it, so you may have to hunt around to find one that sells temporary insurance policies. It’s also worth your while to talk to your friendly insurance broker because they may be more aware of what’s available in this particular field.

Can you get temporary insurance?

Temporary insurance for most business activities can be found, but there may be special exclusions or conditions. Be sure to check what the company does cover. Some short-term insurance policies are restrictive when it comes to high-risk work.

For example, one insurance group that does publish its offer for short-term insurance for handyman companies also has a long list of exclusions. These are mainly high-risk jobs like roof-repairs, foundation work or repair, propane gas connections, heavy machinery or equipment repair, highway work or welding, etc.

How much is temporary insurance?

Obviously, the time you are going to be covered is one of the main factors determining the cost of temporary insurance. A rule-of-thumb calculation of the rates for insurance by the day, week or month for a typical handyman worker can be based on the standard charge for full annual cover.

Let’s say the annual policy charge is around $1000, which is what you can expect to pay for a Business Owners Policy with normal limits in public liability insurance and without very heavy equipment coverage.

You can then expect to pay about $70, equating to 7%, for a single-day policy. For a week, expect to see a charge of around $110-$120, or 10%-12%. So as we said before, there’s a hefty “flag-fall” component in the temporary insurance policy. Although you’re getting seven days of cover compared to just one day, you are not paying seven times the price.

The same thing goes for a policy for one month. The expected charge would be in the range of $160-$180 or 16%-18%, which means you’re getting 29 extra days of cover for just double the cost as the original single day!

Which Professions Require Short-Term Insurance and What Types Do They Need?

In today’s dynamic business landscape, various professions require short-term insurance solutions tailored to their specific needs. For instance, professionals like shopfitters, event planners, carpenters, and handymen may seek Short-Term General Liability Insurance to cover specific projects or events. Those in roles such as estheticians, consultants, designers, and photographers often opt for Business Insurance for 1 Day to ensure coverage for brief, intense periods of work. Short-Term Commercial Auto Insurance is particularly relevant for truck drivers and car rental services who need temporary vehicle coverage. Additionally, Temporary Liability Insurance benefits event organizers and temporary retail vendors who engage in short-lived activities. Construction workers and other contractors might look for Short-Term Contractor Insurance for construction-related projects, while Public Liability Insurance (Short Term) is crucial for event planners and fitness instructors who interact with the public on an irregular basis. Lastly, Short-Term Commercial Insurance supports temporary retail vendors and pop-up stores that operate seasonally or intermittently.

Below is a table detailing these relationships:

This table encapsulates the varied insurance needs across professions, highlighting the importance of tailored insurance solutions in accommodating the unique risks and durations of different business activities.

Why Do Estheticians Frequently Require Short-Term Insurance?

Estheticians often require short-term insurance because their work tends to be project-based or occurs on a flexible schedule. This profession involves providing skincare services that can vary widely, from one-time events like weddings or proms to seasonal engagements such as holiday parties. Short-term insurance allows estheticians to have coverage that aligns with their sporadic work patterns without the financial burden of an annual policy.

For instance, an esthetician might only need liability coverage for a single day when working at a special event where they provide makeup or skincare treatments. This is crucial because it protects them against claims of bodily injury or property damage that could occur while performing their services. Additionally, since estheticians often use various expensive tools and products, short-term equipment insurance is also beneficial during these limited work periods to protect against the loss or damage of their equipment.

Thus, the nature of their work, combined with the need for flexibility and protection against possible claims or losses during short engagements, makes short-term insurance a practical solution for many esthetician.

What are the Pros and Cons of Different Types of Temporary Business Insurance?

In the dynamic world of business, the need for adaptable insurance solutions has never been more critical, especially for enterprises engaging in short-term projects, seasonal activities, or those with fluctuating operational scales. Temporary business insurance, encompassing a variety of specific coverage options like short-term general liability, professional liability, public liability, commercial auto, and comprehensive commercial insurance, offers a flexible and efficient way to protect against unforeseen risks without the long-term commitment.

However, selecting the right type of temporary insurance requires a nuanced understanding of its benefits and limitations. Below is a detailed table that outlines the pros and cons of various temporary business insurance policies, providing valuable insights to help businesses make informed decisions tailored to their unique needs and circumstances.

Final Thoughts

Short-term insurance is an indispensable tool for professionals and small business owners whose work patterns are non-standard or seasonal. It offers a strategic advantage by providing the necessary protection during active business periods without the long-term financial commitment of an annual policy. Although the per-day cost of short-term insurance may appear high compared to annual policies, it is tailored to offer flexibility and precise coverage for specific projects or events, mitigating potential financial risks during these times.

Moreover, many insurance providers offer bundled options that reduce the overall cost when coverage is purchased for consecutive days or weeks. This can significantly lower the expense compared to acquiring separate single-day policies. For example, opting for a 30-day coverage plan is more cost-effective than purchasing weekly coverage four times over, offering savings while ensuring continuous protection.

Ultimately, the utility of short-term insurance in accommodating the ebb and flow of business demands—be it for contractors, event planners, or estheticians—makes it a sensible choice for those looking to align their coverage closely with their operational needs.