Sole Trader Insurance
Business Insurance for Sole Traders*
Sole traders need business insurance, including public liability insurance to protect themselves and their business if something goes wrong when carrying out their work activities.
For example, if you are a sole trader in a trade-based occupation such as an electrician, welder or glazier, Public Liability Insurance may protect you against compensation claims when a third party suffers injury or property damage that was caused by your business activities.
If you are a sole trader providing advice for a fee such as an architect , business coach or accountant , Professional Indemnity Insurance , may protect you from claims of losses suffered because of poor service or advice that you provided.
If you are a sole trader that runs your business from a premise , such as food retailer or product wholesaler, you may be able to combine multiple covers in a single business insurance pack policy.
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.
Get a Quote
How Much does Sole Trader Insurance Cost? *
Key factors in determining how much business insurance will cost a sole trader include:
- The nature and scope of the business. For example, the type of work performed by the sole trader.
- The business turnover and size. For example, is the sole trader a business that does 100% of the work themselves, or do they employee a team of 6 workers?
- Amount of insurance cover the sole trader needs. Liability starts with $5 million cover, $10 million is popular with many self-employed contractors, $20 million cover is needed for sole traders that work for large companies, on commercial sites or have a team of employees.
Business insurance cost for a self-employed sole trader in a low-risk occupation such as painting with no previous claims, starts from around $550* or $55 per month for $5 million Public Liability Insurance.
*** Please note ***: While cheap Insurance can seem attractive on the surface it is important to ensure the policy covers you for the full business activities you undertake, and that the insurance policy and company will respond as intended when there is a claim. Costs may differ greatly from the above based on the business size, clients, experience, and business activities. For many sole traders, that perform broader work, require multiple covers or that have employees, costs will be a lot higher.
Common types of sole trader professions that may be able to be covered:*
- Landscaper and gardener
- Online ecommerce store owner
- Professional adviser, consultant, or coach
- And many more
Why should sole traders use an insurance broker in Australia?*
If you are a sole trader deciding on whether to use an insurance broker for your business insurance, it is important to consider that brokers act in the interests of the self-employed trade.
Direct insurers and agents act for the insurer. This can be important; especially if you need to claim.
Brokers can help sole traders by sourcing competitive quotes on policy inception, negotiate with the insurance companies to prevent or limit increases on renewal, remarket your policy to other suitable insurance companies where appropriate, talk to underwriters about policy wordings, industry classifications and terms, talk to insurance assessors during the claims process and repairers where necessary.
How do I get a sole trader insurance quote?*
Simply TALK to a SMART Business Insurance broker on 1300 542 573 or contact us online for suitable and affordable business insurance quotes for your sole trader business.