Self-Employed: Personal Accident, Income Protection and Workers Comp Insurance

For many self-employed Australians, taking time off work because of an injury or illness can also mean taking time away from earning an income.

Accidents happen. And when they do, it’s good to know that your livlihood will be protected if you need to take time away from work.

What is Personal Accident & Illness insurance?

Personal Accident & Illness insurance can cover your income if you’re unable to work due to illness or injury, even if you are injured outside of work. Options are also available to provide lump sum benefits if you are permanently disabled or pass away.

The cover available, benefit limits and exclusions vary between insurers and policies.

Why self-employed people often consider Personal Accident insurance

Unlike employees, many self-employed people don’t have access to paid sick leave if they’re unable to work. If an injury or illness prevents you from running your business, the financial impact can extend beyond your personal income to ongoing business expenses such as rent, equipment finance or employee wages.

In addition, sole traders without employees generally aren’t covered by workers’ compensation for their own injuries. Understanding how Personal Accident insurance works can help self-employed business owners compare their options and decide what level of financial protection best suits their circumstances.

Key features of Personal Accident & Illness insurance

While features vary between insurers and policies, Personal Accident & Illness insurance may include:

• Loss of income benefits: Regular payments if you’re temporarily unable to work because of an insured injury or illness, helping you manage everyday living expenses.
• Business expenses cover: Optional cover that can help pay ongoing business costs, such as rent, equipment finance or utilities, while you’re unable to work.
• Lump sum benefits: Some policies may provide a one-off lump sum payment if you suffer a permanent disabling injury or die as the result of a covered accident, subject to the policy terms.
• Accidental death benefits: Optional cover that can provide a lump sum payment to your nominated beneficiaries if you die as the result of a covered accident.
• 24/7 cover: Some policies may provide cover whether an injury or illness occurs at work or outside of work, subject to the policy terms.
• Worldwide cover: Some policies may extend cover while you’re travelling overseas, provided you’re an Australian resident and the policy includes this benefit.
• Customisable options: Many insurers offer optional benefits and different levels of cover, allowing you to tailor a policy to your business and personal circumstances.

Depending on your policy, there should also be a description of the amount of time you’ll need to wait after an insured injury or illness before weekly benefits become payable. Waiting periods vary between policies and can affect the premium you pay.

What is income protection insurance?

Unlike Personal Accident & Illness insurance, which primarily focuses on accidental injuries (and, depending on the policy, illness), income protection insurance generally covers a broader range of medical conditions that prevent you from working, subject to the policy terms.

According to moneysmart.gov.au, income protection insurance is designed to replace a portion of your regular income if you’re unable to work due to illness or injury. Most policies cover between 70% and 85% of your pre-tax earnings, paid out in regular instalments (similar to a wage) until you’re able to return to work or until the policy’s benefit period ends. This could be a defined period or sometimes up to age 65 depending on your policy.

The amount payable, benefit period, exclusions and other policy features vary between insurers.

Personal Accident & Illness claim example

Who? Education consulting business, based in Western Australia.

What? The owner of an education consulting business was diagnosed with Myelodysplastic Syndrome, a type of blood cancer. This meant they were no longer able to continue working.

Fortunately, the owner of the business had a Personal Accident & Illness policy in place and lodged a claim under the illness section of their cover.

As part of the claims process, the insurer assessed the claim and requested supporting information, including medical records and evidence of the customer’s earnings. Once the assessment was complete, the claim was accepted under the illness component of the policy. The owner’s policy provided a maximum benefit period of 52 weeks, and they received weekly benefits for the full entitlement available under their cover while they were unable to work.

What is workers’ compensation insurance?

Workers’ compensation insurance is there to protect employees if they are injured or become ill because of their work.

The Fair Work Ombudsman states that workers’ compensation includes payments to employees to cover their wages while they’re not fit for work and medical expenses and rehabilitation. In Australia, workers’ compensation insurance is generally compulsory for businesses that employ staff, although the requirements vary between states and territories. Sole traders without employees are generally not covered by workers’ compensation for their own injuries.

How can self-employed workers think about insurance?

The insurance needs of self-employed workers vary depending on the type of work they do, whether they employ staff and the risks their business faces.

While some types of insurance are legally required, others are optional and designed to help protect your business, income or assets.

This is why many sole traders and self-employed business owners choose to consider Personal Accident & Illness insurance to helpm safeguard their livlihood in the event of an accident or illness.

BizCover lets you compare quotes for Personal Accident & Illness insurance online in minutes. If you’re considering purchasing Personal Accident & Illness insurance, then make sure you find out what your cover options are.

The claims examples are illustrative only and should not be taken as an indication of how any potential claim will be assessed or accepted. BizCover does not assess, manage, decide or settle claims, whether on your behalf or on behalf of any insurer. These, and whether a claim is covered, are determined solely by the insurer.