What types of insurance do sole traders need?

Business insurance is part of many small businesses’ risk management plans, helping them cover unexpected costs and protect their finances. For sole traders, the need for insurance may be even more critical.

Learn why sole traders may want to consider business insurance and which cover options are available to help them protect themselves and their businesses. 

Why do sole traders need insurance?

Sole traders enjoy great freedom when it comes to making business decisions, but this freedom also comes with risk. When things go wrong, a sole trader could be personally and financially liable for setting things right, putting their business and personal bank accounts on the line.
Business insurance provides financial protection to help sole traders pay legal fees, compensation costs, and other unplanned bills (depending on the types of cover chosen).
For some sole traders, certain types of cover may even be mandatory to do business. Insurance may be legally required to receive a professional or trades license, work with specific clients, or meet contract requirements.

What insurance do sole traders need?

Sole traders in Australia may choose different types of business insurance, such as:

Public Liability

Public Liability cover is one of the most common types of insurance and is considered a ‘must have’ for many sole traders and small businesses. It covers legal fees and compensation costs if a customer, member of the public, or a supplier claims against you for injury or damage to their property as a result of your alleged negligent business activity.

A Public Liability policy is often required to lease commercial business space, like an office or workshop. Tradies may need a policy to enter worksites or receive a license or permit. It may also be required to run a business on council land, such as holding personal training sessions in a public park.

BizCover offers flexible Public Liability limits of $5 million, $10 million, and $20 million to suit small businesses of different sizes (cover levels may vary by occupation).

Professional Indemnity

For sole traders who provide professional services or advice to clients, Professional Indemnity insurance is often non-negotiable. If the advice or services you provide are not up to standard, you could be held liable for damages suffered by the client as a result.

Professional Indemnity insurance protects you against losses claimed by a third party due to alleged or actual negligence in your professional services or advice. Subject to applicable limits, your Professional Indemnity insurance will meet the associated compensation payable to a third party together with your defence costs (which can include legal costs, investigator costs and expert fees.

Professional Indemnity policies are typically written on a “claims made” basis. This means that claims are only covered if they are notified or submitted during the period of an active policy. You cannot claim after your policy has lapsed, so your insurer needs to be notified during the period of insurance.

Professional Indemnity insurance is required in most states and territories for many occupations, including real estate agents, solicitors, aged and/or disability care workers, therapists, and more. These insurance requirements may be set by federal, state, or local governments; regulatory bodies; and professional associations.

Business Insurance Package

Business Insurance is an insurance package designed to provide cover for your business contents, stock, tools and commercial premises when an insured event occurs (such as fire, storm, theft or even accidental damage). A Business Insurance Package is an easy and affordable way for sole traders to cover many parts of their small business in one go.

Sole traders can customise a Business Insurance Package to fit their unique cover needs. With 15 cover options, sole traders can protect many parts of their business. That might include choosing Portable Equipment cover for your tools; Contents to protect stock, records, and other owned business items; Business Interruption to help you pay ongoing bills when you’re unable to trade as normal; and Theft to help replace stolen items.

Personal Accident & Illness

For many sole traders, business as usual stops if they are unable to work. Personal Accident & Illness insurance provides a weekly income benefit following an accidental injury or illness once signed off from work by a medical practitioner for a set amount of time.

BizCover also offers optional cover for permanent disablement and accidental death. These will either pay a weekly payment or a lump sum, depending on the policy wording.

A Personal Accident & Illness policy can help sole traders pay ongoing business bills and replace lost income while they recover from an injury or illness. Many Personal Accident policies cover sole traders 24/7, even if their injury happens outside of working hours or on holiday.

Workers’ compensation

Businesses are required by Australian law to have workers’ compensation insurance that covers employee workplace injuries and illnesses. It’s important to note that these policies do not cover sole traders themselves, only their employees.

BizCover does not offer workers’ compensation cover at this time.

Protecting your growing business

Sole traders can protect their small businesses instantly with BizCover. Compare policies online in minutes from a great range of trusted leading insurance partners. Get started today!