Sole trader insurance

Some 60% of Australian business owners are sole traders. As a sole trader, you have the freedom to be your own boss and pursue your true passions. But it also means you bear the brunt of a range of responsibilities, including workplace safety and insurance.

What insurance does a sole trader need?

Finder survey: What prompts Australians to take out income protection insurance?

Compare your sole trader insurance options

Click each to explore the policies you can apply for as a sole trader:

Income protection Personal accident insurance Business insurance

Compare income protection brands

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Personal accident insurance

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Business insurance

How much does professional indemnity insurance cost?

Provider	Occupation	Excess	Quote (monthly)
DUAL	Accountant	$2,500	$51.79
DUAL	Administrator	$0	$52.02
QBE	Administrator	$0	$57.06
QBE	Accountant	$1,000	$71.50
Vero	Plumber or carpenter	$2,500	$95.56
Vero	Accountant	$2,500	$114.81

Quotes are accurate as of March 2023. Based on a small business owner based in NSW who earns $150,000.

Get a personalised liability and professional indemnity insurance quote

What types of business insurance does a sole trader need?

These are the types of business insurance to consider if you're a sole trader:

• Public liability insurance. When there's any chance of people having an accident on or because of your business, public liability insurance is a must. This can help with compensation and legal fees if someone trips and falls on your business premises or injures themselves in your restaurant.
• Professional indemnity insurance. Professional indemnity insurance provides protection for anyone who offers professional advice, such as an architect designing building plans or an accountant. If you're a sole trader who gives advice to clients, seriously consider professional indemnity insurance in case that advice causes problems. This type of cover can include acts of defamation and the mishandling of customer data. It can cover both claims with and without merit.
• Workers' compensation. If you're a sole trader and you have employees, you need to take out workers' compensation for them. This is a legal requirement in Australia.

Why is sole trader insurance important?

Unlike most employees in Australia, sole traders are not eligible for workers' compensation. Not having access to work cover means that if you're injured on the job, you won't have access to any form of financial compensation.

Why can't sole traders get workers' compensation?

A sole trader doesn't qualify for workers' compensation because, in order to be eligible, you must be employed by another person or company.

When you're their employee, they're required to take out workers' compensation on your behalf.

How do I get covered for injuries when I'm a sole trader?

Without workers' compensation, there are 2 main ways you can get covered for injuries you may sustain.

3 things to keep in mind with sole trader insurance

When considering sole trader insurance there are a few important factors to look at:

1. Waiting period

Business expenses insurance has waiting periods anywhere from 14 days to 12 months. The waiting period determines how long you will have to wait to receive the benefit after you make a claim. The shorter the waiting period the higher your premium.

2. Features and limitations

No 2 policies are the same. Make sure you understand the features and limitations of your policy. Take note of how things are defined to avoid any misunderstanding and disappointment when making a claim.

3. Flexibility

Another important factor that you might want to check is how flexible your policy is. For example, some premiums increase in-line with inflation, in which case you can avoid being underinsured.

• Am I eligible for sole trader insurance?

  Criteria will often vary between policies, but in general:

  • There is usually an age limit. This is usually between 18 and 69 for personal accident and up to 59 or 60 for income protection.
  • Permanent resident. You'll need to either be a citizen or be considered a permanent resident of Australia. If you're on a working visa, you can often get cover if you are considered to be living here permanently.

How much sole trader insurance do I need?

To help you answer this question, ask yourself:

• Do you have funds you can readily access? Having some savings only apportioned to your business can provide you with a much-needed safety net. It means you might not require as much cover.
• Do you have plans to expand your business? If you're planning on expanding your business in the future, you need to ensure that your company can continue to grow without you.
• Do you have loans or debts? While sole trader insurance is for protection of your business's fixed costs, it can also ease the financial strain for you in times of need. It allows you to continue to pay your ongoing business expenses.

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Frequently asked questions

• What is a sole trader?

  A sole trader is a self-employed person who runs their own business as an individual. Sole traders bear the legal responsibility for their company, including losses and everyday business decisions.

• How much is insurance for a sole trader?

  It varies. There's a spectrum of different types of cover to match the different types of industries a sole trader could operate in. As a general guide, we sourced 3 business insurance quotes for $10 million worth of public liability, and prices ranged from $24 to $257 monthly.

• Is public liability insurance compulsory for sole traders?

  It isn't a legal requirement, no. However, it is considered a must-have for many sole traders. Also, some companies that work with you may insist you have public liability insurance in order to do business. For example, it's a common requirement if you run a market stall.

  Business.gov.au recommends you speak with "a licenced insurance broker, business advisor or insurers" to determine which insurance your business needs.

• What could affect my payout if I'm on a claim for income protection?

  Income protection insurance replaces a portion of your income based on your annual earnings in the 12 months leading up to your injury or illness.

  If you have a variable income, it's important to be aware of the caps which now apply to income protection. These are less generous to sole traders than agreed value policies, which were stopped in 2020.

• Do I need business insurance if I run my company from home?

  Potentially, yes. While home insurance can cover your building and most contents, it won't cover specialist equipment or any clients who visit your property. Home business cover can help you out here.

  Some insurers give you the option of covering your home and business in one combined policy.

• What isn't covered by public liability insurance?

  Public liability insurance won't cover you for any damages to your own company, or injuries or death to you or any employees. Plus, any other exclusion as outlined in your policy.

• If I run an online business, what else should I consider?

  You may want to look into cyber liability insurance, to help protect your company from cybercrime. It's a form of business insurance that compensares you for lost profits if you're unable to trade owing to a breach. You can also cover privacy protection risks, which can be valuable if you collect and store client information digitally.