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Business Insurance For Sole Traders

Compare business insurance quotes with Savvy to find the best policy for sole traders.

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, updated on August 1st, 2023       

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We’ve partnered with BizCover to bring you a range of business insurance policies to help you compare them side by side.

Flying solo can be an exhilarating experience, but when it comes to running a business as a sole trader, it also means that you’re responsible for everything within your business. That’s why having the right insurance can mean the difference between having a great flight or crashing and burning.  

You can compare quotes for many types of business insurance here with Savvy. Just answer a few simple questions about your business venture and the insurance you need, and you’ll have a wide range of offers to consider instantly from some of Australia’s most respected insurers. Compare with us to help you get the best-value insurance for your small business today.

What types of insurance should I buy as a sole trader?

Sole traders can work in a multitude of different occupations, from accountants to yoga teachers and almost everything in between. As such, there’s a variety of insurance options available to you, including:

Public liability insurance

Public liability insurance is essential for anyone who has contact with other people or their property. It will cover you against claims that your business activity caused injury to a member of the public or damaged their property. This insurance can offer between $5 million and $20 million worth of coverage.

What it covers:

  1. Third-party personal injury claims
  2. Damage to a third party’s property
  3. Legal fees to defend yourself

Professional indemnity insurance

Professional indemnity insurance covers you against claims that the advice, recommendations or service you provided were either wrong or negligent. It’s an important type of insurance to have for sole traders who offer professional advice or services to multiple members of the public. Examples include accountants and legal and allied health professionals. If you work in a unionised occupation, the cost of your professional indemnity insurance may be included in your union fees. Cover is available starting from $250,000 up to $10 million or more.

What it covers

  1. Payment of compensation if there’s a successful claim against you
  2. Payment of court-awarded damages to the litigant
  3. Cover for your legal defence costs
  4. Cover for the cost of disciplinary proceedings or investigations
  5. If you’re a health professional, cover for bodily injury and illness you may have caused

Product liability insurance

Product liability insurance will cover you against third-party claims that a product you supplied was faulty or caused material loss, sickness, injury or death. Product liability insurance is for anyone who supplies products, not just manufacturers. This could be useful for sole traders who work in marketing or selling a particular product. Cover starts from $250,000 and can be bundled together with public liability into a business insurance package.

What it covers:

  1. Claims that a product you supplied (or marketed) caused sickness or injury
  2. Third-party damages claims
  3. Legal fees to defend yourself

General business insurance

General business insurance may also be worthwhile if you have tools, portable equipment, machinery or stock to protect as a sole trader. If you work in a profession which relies heavily on technology, you may wish to consider cyber protection insurance as an add-on to your general business insurance policy.

What it covers:

  1. Fire, storms, theft, vandalism and collision which cause damage to your business assets
  2. Specialist cover for electronic equipment and other portable equipment
  3. Limited business interruption insurance

Personal accident and illness insurance  

Since you rely on working to produce an income as a sole trader, taking care of your health should be a high priority. Accident and illness insurance can provide cover for you if you become sick and are unable to work, providing a weekly replacement income if you’re injured or ill.

What it covers:

  1. Loss of income as a result of an injury or illness

 Optional extras can include:

  1. Death benefits
  2. Disablement benefits
  3. Payment of business expenses during your recovery period

What isn’t covered under business insurance for sole traders?

The most common general exclusions include:

  1. Injury to yourself or your employees
  2. Flood damage
  3. Unlawful activity or criminal negligence
  4. Reckless behaviour or intentional damage
  5. Anything to do with asbestos
  6. The effects of pollution caused by your business activity
  7. Commercial vehicles (must be covered by a separate policy)

How much will my sole trader business insurance policy cost?

There is no set cost for an insurance policy, as each sole trader is different and faces unique risks. Many factors influence the cost of business insurance, including the following:  

  • The state you’re in
  • Whether you live in a rural or urban area
  • Your business size and turnover
  • The industry and occupation you’re in 
  • The products you supply or market (if any)
  • The services you provide (if any)
  • Your insurance history, and whether you’ve made a recent claim

The main factor which will affect the cost of your insurance is the industry and occupation you’re in. All businesses in Australia are classified according to the risk their industry poses, and are allocated a risk ratio. These ratios are used by insurers to calculate the comparative risk of any one business compared to another. Therefore, the cost of business insurance in Canberra may be similar to that for a similar business in Sydney.

You can find out how much insurance will cost for your business by comparing quotes right here with Savvy. Whether you need a long-term insurance policy or one for a one-off event, you’ll be able to compare your options to help you find a policy which is perfect for your business needs

Why do I need business insurance as a sole trader?

You’ve no doubt worked hard to set up your business, so it makes sense you want to protect it in case things go wrong.  Insurance is there to protect you and your business against all eventualities. It’s there to ensure your revenue can continue whether you suffer cyber theft, vandalism or a broken leg.

Most small to medium-sized businesses have some contingency funds, but these are rarely sufficient to cover the cost of a major catastrophe. If this happens and you have adequate insurance to protect all aspects of your business and your income, you’ll have a much better chance of getting back on your feet quickly.

Types of business insurance

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Common questions about business insurance for sole traders

What information will I need to make a claim?

The information you should have to hand when you contact your insurance company to make a claim will include:

  • The name of the policyholder, your policy number and start date (which can be found on your certificate of currency)
  • A detailed description of the incident or what happened to cause the damage, accident or injury, including specific dates and times
  • Contact details of any other parties involved or witnesses to the event
  • Details of your police report number if a crime took place
  • Details of the property including its age and value if you’re claiming for property damage or loss
  • Your bank details for settling the claim
Are my sole trader business insurance premiums tax-deductible?

Yes – the Australian Taxation Office recognises that having business insurance is a legitimate cost of doing business, so the full cost of your insurance premiums can be claimed as a business expense and offset against your income.

How often will I have to pay my insurance premiums?

You’ll be able to choose how often you pay your insurance premiums. You can either pay upfront all in one go for the year or in monthly instalments. Paying your insurance premium annually is usually between 5% and 10% cheaper than paying monthly, so if you’re in the position to pay your insurance annually, it may be worth doing so to get the cheapest price.

Are there any types of insurance which are compulsory for sole traders?

Some professions stipulate that professional indemnity insurance is compulsory to join a particular association or to be registered in an organisation. This may apply to some allied health professionals and alternative therapists, for example. However, it is not compulsory Australia-wide by national legislation.

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Disclaimer:

Savvy is partnered with BizCover Pty Ltd (ABN 68 127 707 975, AFSL 501769) to provide readers with a variety of business insurance policies to compare. Savvy earns a commission from BizCover each time a customer buys a business insurance policy via our website. We don’t arrange for products to be purchased from these brands directly, as all purchases are conducted via BizCover.

Savvy does not compare all business insurance policies or providers currently operating in the market. Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy.

For any further information on the variety of insurers compared by BizCover or how their business works, you can read their Financial Services Guide.

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