Search for insurance help

What Insurance Does a Sole Trader Need?

Small Business Insurance Business Insurance Trades Insurance Life Insurance Income Protection Insurance Professional Indemnity Insurance Liability Insurance Tradies Insurance Professional Services for Trades Insurance

If you're a sole trader, you must understand the importance of having the right business insurance in place. Being a sole trader brings many benefits and responsibilities, and having the correct insurance is one of those responsibilities.

Insurance is key to all small businesses.

A sole trader is an individual that meets the sole trader legal structure, typically a self-employed individual. This means they take on full responsibility for their business and are personally responsible for all liabilities.

When it comes to protecting your business, sole trader insurance is one of the most important things you can do. It helps protect your assets, income and reputation as a business owner. It provides cover in the event of legal action being taken against you, as well as paying out damages or legal fees if applicable.

In this blog, we’ll discuss what type of insurance a sole trader needs in order to ensure the future of their business.

Public Liability Insurance for Sole Traders

Public Liability Insurance is a type of business insurance that any sole trader must consider.

What does it cover?

Public liability insurance covers legal action taken against the business due to claim of personal injury or property damage from a person outside of the business.

It protects any property which is used as a part of, or incidental to, your business activities. It also protects any legal costs, awards and damages that may be faced by the sole trader. So it is a vital coverage for businesses operating in Australia.

Public liability claims can arise from personal injury or property damage.

Management Liability Insurance

Management Liability insurance is designed to provide protection to both the business and its directors or officers for claims of wrongful acts in the management of the business.

Details Get Quote

Business Insurance

A business insurance pack can provide cover for your business premises and contents, against loss, damage, theft or financial loss from an insured interruption to the business.

Details Get Quote

Business Package

Purchase up to six products under one Business Insurance Package.

Details Get a quote!

Public liability insurance typically covers costs such as legal defence, witnesses and settlements with claimants. Having this insurance in place enables sole traders to confidently operate within the law and protect their business should an issue arise.

Without public liability insurance businesses may have to personally foot large legal bills, or potentially have to close their business should they be subject to a compelling claim.

Pubic liability can take the financial burden away from you in the event of a claim.

Given its importance to small businesses, many insurers offer bespoke public liability insurance specifically catered towards sole traders. When selecting the right policy, consider asking yourself questions like: What industry will my sole trader business operate in? What services do I provide? How much protection do I need?

For sole traders operating in higher risk industries such as construction, personal services or food services, it might be beneficial to look into specialist public liability insurance policies which offer additional coverages such as Professional Indemnity Insurance.

The right liability insurance is an investment

Public liability insurance for sole traders should not be seen as an additional expense; it is an investment that can help protect your business from huge financial costs should something unforeseen occur. Shopping around for the right policy for your business can ensure that you are adequately covered and give you peace of mind that your business is protected.

‍

Professional indemnity Insurance for Sole Traders in Australia

Businesses in Australia are faced with increasing pressures, costs and risks which naturally make them cautious as to how and where they invest their resources. As such, individuals who have chosen self-employment as a career choice are particularly vulnerable when it comes to protecting their business assets.

PI generally covers negligence and breach of duties

It is highly recommended that sole traders in Australia purchase PI insurance to ensure they have appropriate coverage in the event of a claim by an unhappy customer, or a third party.

What is Professional Indemnity Insurance?

Professional indemnity insurance (or PI) is a form of business insurance that can provide protection and financial benefits to sole traders or any individual legal or professional entity operating in Australia.

If a third-party claims that professional negligence or malpractice was committed, such as an incorrect piece of advice, modern PI provides the insured with financial support if damages are awarded against them.

What Does PI Cover for Sole Traders?

The cover provided by PI Insurance usually includes cover for allegations of negligence, loss of documents or data, wrongful acts, infringement of intellectual property rights and breach of duty of care and contract.

The policy usually also covers some legal costs for defence against any claim made. What exact cover is provided will depend on the individual policy chosen by the insured and the terms & conditions set out by the insurer.

Why is Professional Indemnity Insurance Important for Sole Traders in Australia?

As a sole trader, one needs to consider the cost associated with any potential legal action taken against their business and their personal assets. In such cases, this business insurance covers the cost should the outcome not be favourable.

PI Insurance can cover costs associated with legal claims made against your business.

Furthermore, it is important to protect your business reputation as well as your professional service or product. Without PI, disputes or accusations may not be overcome satisfactorily due to an inability to pay any damages that are awarded against you as well as legal costs associated with defending yourself.

Do Sole Traders Need Professional Indemnity Insurance in Australia?

The short answer is yes - it's important to have appropriate PI Insurance coverage in Australia. Professional indemnity insurance will provide the necessary protection from claims and any associated costs should any dispute arise with a customer. This can give sole traders peace of mind and ensure the financial stability of their business if anything should go wrong.

Income Protection for Sole Traders in Australia

As a sole trader, you are the lifeblood of any business in Australia. For this reason, it is essential that you consider income protection insurance for your business for adequate financial protection.

Income protection can cover you in the event of injury or illness

Covers lost income

Income protection insurance helps cover any lost income if an injury or illness prevents you from running your small business. It helps to ensure that you won’t suffer financial hardship should you suddenly be unable to work due to an illness or injury.

As a sole trader, without insurance, you could be left without income until you are able to work again – leaving your business at risk of being unable to survive without your skills and time.

Provides peace of mind

By having the right sole trader insurance in Australia, you're able to have peace of mind should something prevent you from being able to take care of your business income. An income protection plan ensures that if an illness or injury does occur, then you are still able to receive the financial support of an income while you are unable to work.

Research thoroughly

When looking into the different types of insurances for sole traders, it is essential that you research and compare the different policies available from different companies.

Different insurances policies offer different coverage options – including different levels of coverage, excess payments and waiting periods for income payments - so it’s important to make sure you select the one best suited to your needs.

Many policies also come with optional extras like additional business insurance, such as public liability insurance, which can provide financial security in case of any unforeseen damage or accidents associated with the running of your business.

Seek bespoke insurance

To get the best out of sole trader insurance policies, it is important that you find one that is tailored specifically to sole traders and their needs. Take time to consider different policies, ensure that you are adequately covered and understand exactly what each one offers.

Taking out income protection and other business insurance can help secure the future of your business and provide peace of mind during uncertain times – so make sure that as a sole trader in Australia, you consider this important protection!

Personal Accident and Illness Insurance for Sole Traders in Australia

Personal Accident Insurance is similar to Income protection insurance.

Both sole trader insurance covers provide you with the means to fight the difficulties that come from being ill or injured, although the specifics of this protection might vary between companies.

Difference between Income Protection and Personal Accident and Illness Insurance?

Generally, Personal Accident and Illness Insurance offers a one-off payment, while Income Protection gives you a regular instalment that is calculated using your typical earnings.

In Australia, sole traders tend to have fewer options for income protection compared to their PAYG counterparts. This makes personal accident insurance a great option for sole traders who want to ensure that their income is maintained if they find themselves in an unexpected situation due to ill health or physical injury.

Having the right insurances keep your business protected, and gives you peace of mind.

Having personal accident and illness cover is particularly important for sole traders who do not have any other form of financial security in place.

Income protection insurance can provide peace of mind, allowing you to focus on your business knowing that your income and lifestyle will be covered if you are forced to take time off due to unforeseen events.

How to Get Sole Trader Insurance

Research providers
When researching Australian insurers and brokers, it is important to determine your coverage needs before seeking out a potential provider.

As a first step, you should check both online and offline sources for advice when researching an insurance provider.

Once you have identified potential providers, be sure to check their customer service record along with their ability to pay out promptly on claims.

‍

Consider which type of cover you need

Once you’ve decided on the right provider, the next step is to determine what type of cover you require.

Whether you’re a sole trader, freelancer or small business owner, your business is unique, so it’s important to understand the types of insurance cover available in Australia and how they will apply to your business.

Keep in mind that policies like public liability, professional indemnity and cyber insurance may not be necessary for all businesses.

‍

Get a quote and compare prices
When it comes to insurance, price is important but don’t forget to weigh up other factors such as customer service reputation and coverage limits when comparing quotes from different providers.

It’s important to remember that cheapest isn’t always best – so don’t just go with the cheapest quote straight away – check the policy details thoroughly first before making your decision.

Sign up for the policy

Finally, make sure that you read all the terms and conditions of the policy carefully before signing up. Once you have signed up for coverage, be sure to keep any paperwork received by the insurer or broker in a secure location. Finally, don’t forget to review your policy each year as your business needs may change over time.

You're protected

Getting the right sole trader insurance covers you from any risks that could arise in your business in Australia. Whether you’re a small business owner, freelancer or sole trader – make sure you have done your research thoroughly and have chosen the right level of coverage for your needs before signing any agreements with an insurer or broker.

Final Word

Summary of these insurances for small business owners

Business owners in Australia are often faced with the challenge of finding the right type of insurance to cover the cost of any damages they might incur while doing business. An insurance broker can provide invaluable guidance in finding the right type of insurance to make sure the business is protected when things go wrong.

Sole traders need to make sure they have insurance cover in place, as they are personally liable for any losses incurred. An insurance broker is able to evaluate an individual’s needs and offer tailored advice on the most cost-effective and suitable insurance cover for sole traders, ensuring that their businesses are adequately protected.

Benefits of having sole trader insurance

Sole traders need insurance as its a key component of any business plan. For Australian business owners, engaging an insurance broker to select the right cover and ensure they are protected from a variety of potential risks is strongly recommended. An insurance broker can help choose policies that cover the cost of any third-party damages that may result from business operations and activities which help protect the company’s assets and reputations.

In addition, an insurance broking service can also provide advice on workplace health and safety policies and procedures, as well as identify areas for improvement within the business.

Ultimately, with the right levels and types of insurance cover, sole traders can rest assured that their businesses will be protected if the worst should happen.

If you're seeking any of these insurances, contact Sydney Insurance Brokers - Ensura Brokers.

We work with you to understand your business - how it works, where your risks are, what your existing risk management plan looks like and what cover you need to ensure you're appropriately protected.

We then seek out the right insurances through our extensive network and present these options to you. We also provide claims management in the event you are required to make a claim. To find out more, reach out today!

Disclaimer: As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy document. The information contained on this webpage is general only and should not be relied upon as advice. The opinions expressed in the Blog are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific insurance product. It is only intended to provide education about the financial and insurance industry. The views reflected in the commentary are subject to change at any time without notice.

sole trader sole trader insurance tradie insurance

General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

All information above has been provided by the author.

Marel Pencev, Tank Insurance, ABN 22 652 716 964, AFSL 478959

This article originally appeared on Ensura Brokers Insights and has been published here with permission.