What Insurance do I Need for my Small Business?

Originally Published Jul 22, 2021

what insurance cover do small businesses need in Australia

If you’ve started or are thinking of starting a business, chances are you’ve had a look at what small business insurance is available… and you’ve probably walked away with your head spinning. We get it… it’s a lot to take in. But it’s so important that your covered to avoid losing anything you’ve worked so hard to gain. Read on to learn the 101 of small business insurance in Australia, what kind of insurance small business and the importance of it for your small business.

What insurance cover do I need for my small business in Australia?

To operate as a small business in Australia, there is some insurance that is compulsory including workers’ compensation insurance, public liability insurance and third-party personal injury insurance. However, not all small businesses are required to take out this compulsory insurance.

The type of insurance you’ll need for your small business depends on how you operate. So first, let’s go over the kinds of insurance you might need to operate your small business in Australia.

What kind of insurance do I need for my business?

To operate your small business in Australia while protecting yourself and mitigating risk, these are some of the kinds of business insurance you may want to look into including:

  • Workers’ Compensation Insurance
  • Public liability insurance
  • Third-party personal injury insurance
  • Professional indemnity insurance
  • Product liability insurance
  • Business insurance
  • Cyber liability insurance

Below, we will go through the different types of insurance and how it affects your business.

Workers’ compensation insurance

If you have employees, you’ll need workers’ compensation insurance which covers your employees if they get injured or ill due to a work-related accident. Workers’ compensation insurance covers first aid, worker’s compensation and return-to-work rehabilitation.

In Australia, workers’ compensation insurance is compulsory for businesses who have employees.

what kind of insurance do I need for my small business
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Public liability insurance

Public liability insurance covers you and your employees in the event your products or services cause bodily injury or property damage while on your premises or under your care. This might be your food making someone sick or your electrical services causing a fire.

Public liability insurance is also compulsory in Australia.

Third-party personal injury insurance

Third-party personal injury insurance covers anyone with a motor vehicle and may be part of your business’ insurance considerations. However, this is dealt with in conjunction with your vehicle’s registration which is also compulsory in Australia.

Professional indemnity insurance

Professional indemnity insurance protects businesses who offer professional advice or services against falling liable for any damages or legal costs due to an act, omission or breach of duty on your part including not achieving the results of a contract, providing negligent advice, medical malpractice or poor legal advice, for example.

why small business need insurance

Product liability insurance

Product liability insurance protects your business if one of your products results in injury or death, emotional distress, or property damage to your customers. Anyone who sells goods can mitigate their risk by holding this type of insurance.

Business insurance

Most insurance company’s offer fully covered business insurance that’s typically sold in a bundle to protect your business’ assets including your property, stocks and products as well as any losses incurred due to business interruptions, natural disasters and theft.

Cyber liability insurance

These days, most businesses run using some sort of technology that’s connected to the internet. So, cyber liability insurance comes in handy to protect your business from cybercrime as well as covering your electronic devices from damage, theft or destruction.

What insurance does a small business need
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What insurance does a small business need?

With all that being said, the type of insurance you’ll need as a small business depends on what business activities you take part in and how much risk you’re willing to assume. Every small business is different and there’s no one-size-fits-all approach to business insurance.

Considering the types of business insurance we mentioned above, let’s now explore some scenarios that may relate to your business to help you select the best kind of insurance you need for your small business in Australia.

First and foremost, compulsory insurance such as workers’ compensation insurance is required for any business who hires employees. It’s essential that you protect both yourself and your employees in the case of illness or injury. However, if you’re a sole trader with no employees, there’s no reason to take our workers’ compensation insurance.

Next, let’s talk about professional indemnity insurance. Since we run a physiotherapy franchise, we deal with professional indemnity insurance when opening every Physio Inq across Australia. Because physios give advice to their clients, it’s important that they’re protected from negligent information or unmet goals. Of course, no one ever means to give poor advice, but things happen and you want to make sure you’re protected if you give professional advice.

Lastly, most business insurance policies offer coverage for your business’ premises, stock, products and other assets. You’ll always want to make sure your business is insured in case of a fire, flood, theft, damage or any losses incurred due to an accident or business interruption.

Even if you don’t have an office space or business location, you’ll still want business insurance to protect your home office or any tools or technology you require to do your job.

Which leads us to our next point -- business insurance for sole traders.

What insurance do I need as a sole trader?

Sole traders generally require a tailored insurance policy to protect their business based on their specific needs.

Perhaps the two most common types of business insurance sole traders can benefit from include home and contents cover if you have a home office and professional indemnity insurance to protect you from legal action due to your professional advice.

However, if you sell products, it’s a good idea to consider product liability insurance and if you see clients or welcome patients into your place of business, public liability insurance is compulsory in Australia.

It’s especially important to keep in mind that your personal insurance policy may not cover business expenses even if you’re a sole trader. So, be sure to read the fine print if you assumed your business was taken care of under your personal home and contents cover or other liability cover.

Again, the business insurance you’ll need as a sole trader depends on your business activities, assets and more. So, be sure to speak with your insurance representative to come up with a bespoke package that works for you.

How much is small business insurance in Australia?

The cost of business insurance in Australia depends on the nature and scope of your business activities, your size, annual turnover rate and the amount of cover you receive. On average, most small businesses pay between $50 and $100 per month and sole traders often pay even less.

Most insurance costs are nothing compared to how much you could lose in the face of a natural disaster, business interruption, injury, illness or law suit that might face your business in the future. Plus, peace of mind is worth a lot and, generally speaking, it’s better to be safe than sorry.

do you need business insurance in Australia

Do you have to have insurance for a small business?

It depends. Some small businesses are required to have compulsory insurance in Australia including workers’ compensation insurance, public liability insurance and third-party personal injury insurance.

However, if your small business doesn’t fall into a category that requires these kinds of compulsory insurance policies, then you may not be required to have insurance at all for your small business.

Still, it’s for your own protection to take out business insurance to mitigate risk no matter how big or small your Australian business is.

For the most up-to-date expert advice on business insurance, it’s best to talk to an adviser or insurance agent. They can help you better understand your options based on the specifics of your business activities.

Want more small business-related information? Check out some of our other articles offering helpful hints for entrepreneurs and business owners.

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The information provided on this blog is intended for educational and informational purposes only. It is not intended to be a substitute for professional advice or treatment. Always seek the advice of a qualified professional with any questions you may have regarding a medical condition. Never disregard professional medical advice or delay in seeking it because of something you have read on this blog.

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