Business insurance by the month, day, hour – temporary 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. 

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 Insurance

Fortunately, some insurance companies have begun to offer special policies where you can nominate a specific period when you want to be covered. By only paying for the period of cover that you need it for, you will save by having lower premium costs while still having the same risk cover.

Suppose your new form of income earning is sporadic, which means you don’t do the same level of business activity every day or week or month.

In that case, temporary insurance can be an excellent alternative to full annual cover. A good example would be if you have to take care of some very special dogs, but only once each month, In this case, dog walking liability insurance for a day is all you need, on the days that you are caring for the animals and you have to look out for your own financial safety as well.

It’s important to understand upfront that insurance companies cannot structure policy cover so that regular part-time or casual businesses can be insured on a temporary basis.

The key feature of short-term insurance is that you purchase the cover for a specific and defined period – a date on the calendar, or a week starting on a specific date, or a month – for example for 30 days beginning on the specified date. Insurance for “mornings only” or such is not available.

Temporary insurance coverage can provide you with all the usual protection from risk in the same way as regular annual cover.

So it’s essential to find a policy that covers all of the risks that you are taking on when you start the work.

Every business needs the basic elements of Public Liability Insurance and Property Insurance.

Public Liability Insurance

Public liability insurance helps protect you and your business from claims in cases where there’s some accidental bodily injury or property damage to someone in the course of your business activity, and they sue you for compensation. You are covered for bodily injury; property damage; legal defense and medical payments. Normally, public liability insurance limits are $1 million for a single claim.

Handyman liability insurance by the month covers you when you are working on a short-term job for a customer in case of bodily injury to some other person.

It covers expenses if anyone is injured or dies. A typical example is if someone trips and falls when stepping over a step you broke accidentally inside your customer’s home.

They can sue for pain and suffering, and for medical expenses. If there are long-term effects from a serious injury, the bill can run into the hundreds of thousands of dollars.

Another example is for a dog walking business. While you have a dog under your control, if it attacks and injures a passer-by, or say if you bring the dog home in an agitated state and it attacks a member of the household, you can be taken to court and face substantial costs. Public liability is designed to cover you for just such as event.

Let’s suppose you are a college teacher, and on the long summer break you choose to start an animal-caring business, with dog-walking, cat sitting and pet taxiing bringing in several hundreds of dollars each week.

For the period that you are doing this business, you are liable for all of the risks we have outlined here, and it’s vital for your financial well-being and peace of mind that you should take out basic liability insurance.

Insurance companies can provide temporary cover for the period of your casual work. The extent of the cover is exactly the same as if you were running the business full-time for the whole year, but the costs are considerably less if you take out a temporary policy.

Property damage coverage protects you from accidental spoilage to a third party’s property. Let’s say you are a carpenter busy inside your customer’s study. In an accident, your high-speed saw blade splits and flies off, chopping a hole in the antique table across the way.

Your policy would help cover the cost of repairing the table, or paying out the value claimed by the customer.

In the same way, photography insurance by the month makes sense if your photography business is very seasonal, such as for outdoor events. In this case, having insurance during the cold and wet winter months would be a waste of money.

In case someone sues you, you need cover against legal expenses. Public liability covers the cost of an attorney who represents your business in a lawsuit brought by anyone claiming some form of accidental damage or injury in the course of your work.

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.

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!

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.

Temporary car insurance

This is probably the most accessible kind of short-term insurance to get. Suppose you are borrowing a car for several days or weeks for use in your own business activity. In that case, you need separate insurance, because the car-owner’s policy may not cover you in any way.

Especially if you’re renting a car or truck, you must take out a short-term insurance policy that covers explicitly your business usage of the vehicle. Standard leasing agreement almost all exclude business use of the vehicle.

Auto insurance by the mile or by the hour or month is an option if you are using a car or truck periodically for specific business activity.

Table of Business insurance by the month, day, hour

* all the prices are assessment

Final thoughts

There are many times when short-term insurance makes sense for businessmen who engage in irregular or casual activity. However, compared to a full annual policy, it is expensive when you compare cost-per-day.

The good thing is that many of the options give you an incentive to bundle the coverage because you avoid paying the “flag-fare” repeatedly.

For example, 30 days of cover given to you in a monthly policy does not cost four times as much as individual covers per week, so if you have a way to bunch your work together, then you are paying much less for the essential insurance cover.