Sole Trader Insurance

Why Sole Traders need Insurance*

Sole traders need business insurance, as unlike small business owners that operate under a company structure , there is no separate entity shielding them from personally having to pay for the damages if something goes wrong.

This means is that if there is an accident or claim against a sole trader as a result of their business activities, they may be personally liable for the damages.

Suitable cover for sole traders may provide cover to survive a legal battle.

Sole traders typically need insurance coverage when signing a lease or gaining access to a site. Clients and landlords often require sole traders to carry suitable insurance.

Personal Accident and Sickness Insurance may also protect a sole trader from having to go without most of their income if they can’t work because they are sick or injured for an extended period.

Fortunately, suitable business insurance for sole traders may provide cover against financial hardships that could arise from accidents, property damage, injury, sickness or legal claims caused by your sole trader business activities.

What Types of Insurance do Sole Traders need?*

Some of the major types of business insurance covers available to sole traders in Australia are explained below and include:
• Public Liability Insurance
• Business Insurance Pack
• Personal Accident Insurance
• Professional Indemnity Insurance
• Cyber Insurance
• General Property and Tools
• Commercial Motor insurance
• Plant and Equipment Insurance

Public Liability Insurance *

Public Liability Insurance coverage is essential for all sole traders; especially for sole traders whose work may impact another person or property.

For example, for sole traders in trade-based occupations such as electricians, welders and glaziers, Public Liability Insurance is vital.
Sole traders in trade occupations typically work with a range of tools and materials that increase the probability of an accident on site.
People and property on site may be hurt or damaged due to accidents involving trade-based work performed by sole traders.

Protections offered to sole traders by public liability insurance in Australia , whether their work is trade based , retail , wholesale, or professional services, generally include:

• Injury to other persons due to your sole trader business activities – Where a sole trader’s business activity causes harm to a third-party person. For example, a client ignores your warnings to stay away from the site and injure themselves when they trip and fall on your equipment.
• Damage to others property due to your sole trader activities – Where a sole trader’s business activity causes damages to a third- party’s property. For example, a sole trader may accidently cause damage in a client’s home while performing work.
• Harm to other persons or other persons property due to your sole trader business’s products – Where a sole traders business’s products and goods supplied causes harm to a third party -person or a third- party’s property. For example, products a sole trader has supplied, repaired, or manufactured cause harm, injure someone or cause property damage. Alternatively, if a sole trader provides food that causes a client to become ill .

Public liability insurance coverage may protect sole traders from claims that arise when others allege, they are negligent.
A sole trader’s public liability policy may provide a defence against the ensuing lawsuit when needed and may pay the damages sought by the injured party.

Public Liability Insurance may provide protection for slip-and-trip accidents, accidents that damage client property.

Business insurance pack for sole traders*

Sole traders may be able to combine multiple covers in a single business insurance pack policy.

By ‘packaging’ your business insurance into a ‘business pack’ sole traders can potentially cover many of the risks their business faces in the one policy.

For example, if a sole trader has a commercial premises, a business insurance pack may provide cover for buildings and contents if they are accidentally damaged by a defined event, such as fire, storm, impact damage, accidental damage, vandalism, or malicious damage.

Other typical inclusions for sole traders with a business insurance pack are Public Liability Insurance and Product Liability Insurance.

Optional inclusions for sole traders with a business insurance pack are General Property, Contents, Machinery, Plant and Stock , Glass, Money , Business Interruption and Marine Cover.

Professional Indemnity Insurance for sole traders *

Professional indemnity insurance is recommended for sole traders that offer advice for a fee such as marketing consultants ,architects , business coaches, management consultants and accountants to name a few.

These professional sole traders require professional indemnity insurance because of the risk around the advice and services they provide.

If a professional sole trader makes an error, such as providing incorrect information, makes an omission in due diligence, or provides advice that leads to damages or losses for a client, a client may seek damages from the sole trader.

Professional Indemnity Insurance may help these sole traders stay in business by paying for legal defence costs, and for damages if awarded against them.

For example, a client of an accountant sole trader may claim they suffered financial loss as a result of your advice. Professional indemnity may help pay for the sole traders legal costs to defend themself, and for any damages that are awarded against them. Trade sole traders should also consider professional indemnity insurance if they provide advice for a separate fee.

If you are a self-employed sole trader and want to understand if professional indemnity insurance will provide suitable cover for your business activities, please call a Smart Business Insurance broker.

Professional Indemnity Insurance may provide protection for errors or advice that cause a client to lose money, claims of negligence.

Cyber Insurance for sole traders *

Cyber insurance is strongly recommended for sole traders that hold customer data or take payment electrically such as professional service suppliers, online retailers, traditional retailers. Cyber insurance may help sole traders recover financially from data breaches and cyberattacks.

Cyber Insurance may provide protection for Data breach notification costs, Data breach investigations, PR costs for reputational harm.

Personal Accident Insurance for self-employed sole traders*

As a self-employed sole trader your personal safety is your livelihood.
Personal accident insurance for sole traders may provide cover for 52 or 104 weeks and up to 85%* of weekly income at the time of the injury; depending on the amount of coverage agreed when the policy is taken out.

Time away from work from an accident will have a direct impact on a self-employed sole trader’s income, and a long period away can negatively affect their savings, family, and lifestyle.
Personal Accident Insurance may help self-employed sole traders pay for essential bills and other financial commitments if they have an accident.

General Property and Tools Insurance for sole traders*

As a sole trader you are likely to have many tools and equipment that allow you to do your job. If your property is damaged or stolen, your business cannot operate effectively.

General property insurance can help you keep operating effectively. It can provide needed funds to replace your tools and help keep you in business.

Commercial motor insurance for self-employed sole traders*

Commercial motor insurance should be considered for sole traders that drive their vehicle from site to site. Light trucks, vans and Utes may be covered.

Plant & Equipment Insurance for sole traders*

Plant & Equipment Insurance may provide cover for sole traders that operate plant and equipment.
Cover may provide sole traders with protection for theft, damage, consequential loss, liability, road risk and machinery breakdown.