A sole traders and freelancers guide to business insurance

Working for yourself as a sole trader or freelancer creates many different opportunities. Whether you’re a photographer, a tradie, a graphic designer or run an online retail store, there’s one thing that sole traders and freelancers all have in common- the need to protect their business with business insurance.

In our guide we share the basics on some of the different types of business insurances and how they can protect your sole trader or freelance business, without the jargon and boring bits! Let’s start with one of the fundamental types of business insurances, Public Liability.

What is Public Liability Insurance*?

Public Liability insurance provides protection* for you and your business in the event a customer, supplier or a member of the public are injured or sustain property damage as a result of your negligent business activities.

Public Liability insurance is one of the main types of insurances that a variety of different types of business need to consider. It is relevant to pretty much any profession that has interactions with third-parties from clients to members of the public and suppliers.

What does Public Liability Insurance typically cover?

Compensation for:

• Personal injury suffered by a third party (e.g. a customer, supplier or member of the public)
• Damage to property owned by a third party due to your negligent business activities
• Legal and defence costs associated with a covered claim

What is not typically covered?

• Injuries to your employees
• Damage to your own property
• Costs of rectifying faulty workmanship
• Professional negligence
• Contractual liability
• Events occurring before or after the policy period

Why do sole traders and freelancers need to consider Public Liability insurance?

These are a few examples of when sole traders and contractors may need to consider Public Liability insurance.

• If you run your business from home, having clients visit your premises creates an opportunity of risk for them to suffer an accidental injury or damage to their property. Accidents can happen in the blink of an eye and claims can occur from slips, trips and falls resulting in an injury^.
• If your business involves having a market stall, you may be required to have your own Public Liability insurance in place.
• If you use a public space like a park to train and exercise with your clients you may need to have a certain level of Public Liability insurance in place. It is always wise to keep a copy of your certificate of currency with you too in case you need to produce a copy.
• If your business is a mobile based business, your Public Liability insurance policy will protect your anywhere in Australia. This gives you peace of mind knowing that you have some protection in place if you were to cause accidental damage or an accidental injury when out visiting a client whilst delivering your services.

What is Professional Indemnity insurance*?

Professional Indemnity insurance is an important form of protection for businesses that provide specialist services or professional advice. Some of the types of sole traders and freelancers which may require Professional Indemnity insurance include architects, graphic designers, engineers, accountants and life coaches for example.

It is designed to respond to claims against your business for losses as a result of actual or alleged negligent acts or omissions in the provision of your professional service or advice. Professional Indemnity Insurance will also assist with the legal costs associated with responding to or managing claims which are covered by the policy.

Some of the reasons why a Professional Indemnity insurance claim may occur include:

• Providing the wrong advice
• Incorrect diagnosis or treatment
• A miscalculation

What is typically included?

Depending on the Professional Indemnity policy selected, your policy could include cover for:

• Payment of compensation as a result of a claim, including but not limited to Court awarded damages
• An award of legal costs against you
• Reasonable legal costs incurred in defending or responding to the claim
• Claim investigation costs
• Disciplinary proceeding costs

What is typically excluded?

Depending on the policy you have selected some of the exclusions could include:

• Intentional damage
• Contractual liabilities
• Your professional fees
• Known claims and circumstances
• Fraud and dishonesty

Why do sole traders and freelancers need to consider Professional Indemnity insurance?

Giving professional advice and services to your clients is something you take pride in, but the reality is even if you take all the right steps and care, mistakes can still happen. Professional Indemnity insurance provides peace of mind protecting you when you need it most.

Some Professional Indemnity insurance policies may even include coverage for PR related expenses, something that should be confirmed by your insurance provider.

What is Business Insurance?

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 can also cover your portable equipment, glass, tax audit and for loss of revenue due to business interruption in specified circumstances.

There are many working parts that go into keeping your sole trader or freelance business going. Things like your business assets help you to connect with your clients and tools of trade can help you get the job done. Considering some form of protection for these is an investment in safeguarding your business in the event a claim may occur.

These are some of the different types of Business Insurance coverages available for selection.

Business Interruption*

Business Interruption cover provides protection for the loss of income and increased costs of operating your business caused by a specified insured event (such as property damage or fire).  It is designed to help your business recover from an insured event by paying ongoing expenses (such as wages or rent).

What’s typically covered*?

• Loss of turnover due to damage to your own premises as a result of an insured event
• Additional costs of working

What’s typically NOT covered*?

• Undocumented income
• Losses due to labour strikes and changes in legislation
• Losses beyond the indemnity period
• Voluntary closures
• Losses due to breakdown in equipment or machinery

Contents*

Covers your business contents or stock if they were damaged in a fire, storm or due to malicious damage or some other defined event listed in the policy. Even if you run a home-based business with a personal contents policy in place, your business contents are likely to be excluded.

Some of the insured events that are typically covered* by a Contents insurance policy include:

• Fire
• Lightning and explosions
• Storm, wind and water
• Earthquake
• Impact damage
• Malicious damage and vandalism
• Accidental damage

Some of the events that are typically not included* under a Contents Insurance policy include:

• Wear, tear or gradual deterioration
• Intentional damage caused by you
• Damage caused by insects or animals
• Rust, mould or mildew
• Machinery breakdown
• Computer virus or hacking
• Pollution
• Any person deliberately switching off power supply
• Faulty design or workmanship

Tax Audit*

Tax Audit Insurance covers a business for specified costs if the ATO selects it for auditing. The policy covers the costs of accountants and other professional fees incurred in the course of an audit. The process of an audit can be time-consuming, complicated and could possibly create a significant financial impact.

Having the expertise of an external accountant or similar professional to get the job done right can be very costly. Fortunately, this is where Tax Audit insurance comes into play.

What is typically included?*

• Accountants fees
• Tax agent fees
• Limited other professional’s fees incurred to responding to a tax audit

What is typically not covered?*

• Fines or taxes imposed
• Your time or salary or lost opportunities
• Your employee’s time or wages

Portable Equipment*

Portable Equipment insurance (also known as General Property insurance) covers you for loss and damage to items of portable equipment associated with your business. These can include tools of trade and items of stock.

Get your sole trader or freelance business insurance sorted without the drama at BizCover today. We provide multiple quotes from a selection of leading Australian insurers in the click of a button. There’s no paperwork to fill out or fancy lingo, just insurance made easy. Get a quote today.