Small Business Insurance Australia: What You Need and Costs

For most Australian small businesses only two insurances are compulsory: workers compensation once you hire someone, and compulsory third party injury cover on any vehicle, which comes with the registration. Everything else, from public liability to cyber, is legally optional, but much of it becomes unavoidable once a landlord, council or client asks for a certificate of currency.

This is general information, not financial product advice, and it doesn't consider your circumstances. Read the Product Disclosure Statement (PDS) and Target Market Determination before you buy, and consider advice from a licensed broker. Figures are as at October 2026.

Three buckets: legally required, contractually required, sensible

Sorting insurance this way stops you buying things you don't need and skipping things you do.

business.gov.au lists the common compulsory covers as public liability, which some states and territories require for certain occupations, workers compensation if you have employees, and third party personal injury insurance if your business uses vehicles. A sole trader with no staff, no vehicle and no licensed trade is required to hold nothing at all. That isn't the same as needing nothing.

Insurance by business type

The table shows which covers are commonly required or worth pricing for six common kinds of small business. "Required" means a law, licence, lease, platform or typical client contract commonly asks for it; check your own licence and contracts. It is a starting point for a conversation with an insurer or broker, not a recommendation.

Sources: our guides to public liability, product liability, professional indemnity, workers compensation and sole trader insurance, which list the licence rules and regulators behind each requirement (checked 17 October 2026). For set-up costs and licences by industry, see how to start a trade business, cleaning business, cafe, online store, consulting business or personal training business.

Public liability

Public liability pays compensation and legal costs if your business activities injure someone or damage their property: a client trips on a cable in your studio, your ladder goes through a shop window. It doesn't cover your own injuries, your employees, your own tools or bad advice. No Australian law makes it compulsory for every business, but some licences require it, and leases, councils and head contractors routinely ask for a certificate of currency for $10 million or $20 million before you can work. As a sole trader you have no corporate shield, so a serious claim can land on your house and savings; our guide to choosing a business structure explains why that matters.

Occupation drives the price. upcover's published figures put a typical policy at about $605 a year, within a range of $370 to $840 including GST and duty, and BizCover customers averaged $39 a month in 2023–24. In upcover's 2026 illustrative quotes, moving the same handyman or electrician from $10 million to $20 million added only about $60 to $69 a year.

Our public liability guide covers exclusions, choosing a limit, certificates of currency and subcontractors. How much public liability costs breaks prices down by occupation, cover level and state, with stamp duty and GST worked through.

Product liability

Product liability covers injury or damage caused by something you make, import, sell or supply. It is usually bundled with public liability as "public and products liability", so check your schedule rather than assuming. Importers need particular care: under the Australian Consumer Law, an importer counts as the manufacturer when the overseas maker has no office in Australia. Standard liability policies don't pay to recall stock, and any supplier must report a death, serious injury or serious illness linked to a product within 2 days. Our product liability guide covers recall cover, marketplace rules and costs.

Professional indemnity

Professional indemnity (PI) covers claims that your advice, design or professional service caused a client a financial loss, plus defence costs. It's compulsory for registered tax and BAS agents, AFS and credit licensees, solicitors, registered health practitioners, migration agents and several property and building roles, each with a regulator-set minimum. It's one reason a registered BAS agent costs more than a bookkeeper.

PI is written on a "claims made" basis: the policy in force when the claim arrives responds, not the one in force when you did the work. Cancel it when you close and a claim six months later has no cover, which is why retiring professionals buy run-off cover. BizCover customers paid an average of $103 a month in 2024–25, from $62 for accounting and bookkeeping to $210 for architecture and engineering. Our professional indemnity guide lists the minimum cover for more than 20 regulated roles and compares PI with public liability. Most service businesses need both.

Workers compensation: compulsory once you hire

Workers compensation covers employees' medical costs and lost wages if they're injured or become ill through work. It's compulsory in every state and territory, each running its own scheme, and it's the one insurance you can be penalised for not holding. Put it on the list before day one, alongside super, STP and the Fair Work paperwork in our first employee checklist.

As at October 2026, from our state-by-state workers compensation guide, which also covers 2026–27 premium rates, penalties, contractor tests and injury reporting deadlines. Thresholds are reviewed each year, so confirm with your regulator before relying on an exemption.

Contractors muddy this. Many schemes deem certain contractors to be "workers", especially sole traders who work mostly for you without staff of their own. An ABN doesn't settle it, so check your state's test.

Skipping it is expensive. In NSW the scheme pays an uninsured employer's injured worker and recovers the claim costs from the employer, on top of penalties. Victoria can impose fines, a statutory penalty of up to 100% of the avoided premium, and liability for the full cost of claims. One injury can cost more than a decade of premiums.

And workers compensation does not cover you if you're a sole trader or partner. See "Covering yourself" below.

Business pack: contents, stock and business interruption

A business insurance pack bundles the property covers premises-based businesses need: contents and fit-out, stock, glass, theft, money, often machinery breakdown and "general property" for tools you carry around. Landlords usually require you to insure your own contents and fit-out and to note their interest on the policy.

The section owners most often skip, and most often regret, is business interruption. It replaces lost gross profit and pays ongoing costs like rent and wages while you can't trade after fire, storm or flood. Rebuilding takes months; the rent doesn't pause. If a forced closure would drain your reserves, read our guide to cash flow management, then price the cover.

The classic mistake is underinsurance: nominating a sum insured that's too low, then finding the payout scaled down in proportion. Value contents and stock at replacement cost and update it every renewal.

Cyber insurance

Cyber insurance pays your own costs after a cyber incident, such as incident response, forensics, data restoration, lost income and extortion, and covers claims from people whose data was exposed. The Australian Signals Directorate's Annual Cyber Threat Report 2024–25 put the average self-reported cost of a cybercrime report at $56,600 for a small business.

Insurers now expect multi-factor authentication, offline backups and endpoint security before they quote, and fake-invoice losses are often excluded unless you add a social engineering extension. There's no reliable published average premium for Australian small businesses, so get two or three quotes on the same limit and excess. Businesses with turnover of $3 million or more must report any ransom payment within 72 hours. Our cyber insurance guide covers what policies exclude, what insurers ask and the Notifiable Data Breaches scheme.

Covering yourself: personal accident and income protection

A sole trader who breaks a wrist has no income until it heals. Two products fill the gap:

• Personal accident and illness insurance pays a weekly benefit, usually a percentage of your income for a set period, if injury or illness stops you working. It's built for the self-employed and often sold alongside public liability.
• Income protection does a similar job with longer benefit periods and more underwriting. Premiums for a policy held outside super are generally tax deductible and benefits are assessable income; premiums paid through your super fund aren't deductible to you personally. Life, trauma and TPD cover are separate and not deductible.

Our sole trader insurance guide compares the two and explains the ATO's split-premium rule. For the rest of what you can claim, see sole trader tax deductions.

Vehicles, tools and management liability

CTP covers injury to people and comes with registration; it does nothing for your ute, the other car or the tools in the back. If a vehicle is used for work, tell the insurer, because a personal comprehensive policy can decline a claim made while carrying stock or driving to a job. Tool cover usually comes as a general property add-on, with theft-from-vehicle conditions that require the vehicle locked and tools out of sight. Management liability, for companies, covers directors and the company against claims such as unfair dismissal, discrimination and breaches of directors' duties; it's rarely needed on day one but becomes relevant once you employ people.

Small business insurance in Victoria

Victorian businesses follow the same national basics, with a few state-specific rules worth knowing.

• Insurance duty is falling. The State Revenue Office is phasing out duty on business insurance by one percentage point a year. It's 7% for policies taken out or renewed from 1 July 2026 to 30 June 2027, 6% from 1 July 2027, and nil from 1 July 2033. The rate depends on when the policy is taken out or renewed, not when you pay.
• Which covers get the lower rate. Public and product liability, professional indemnity, cyber, directors and officers, employers' liability, fire and industrial special risks, marine and aviation. Other general insurance stays at 10%, and a package policy is split between the two rates. The reduction applies automatically.
• Workers compensation. Register with WorkSafe Victoria once you pay, or expect to pay, more than $7,500 a year in remuneration, or from the start if you take on an apprentice or trainee. A director paid more than $7,500 by their own company must register even with no other staff.
• Licence rules. Registered electrical contractors must hold at least $5 million of public liability (Energy Safe Victoria). Licensed conveyancers, building surveyors and inspectors, and lawyers have PI minimums set by their regulators, and the Victorian Building Authority explains the mandatory home warranty and domestic building insurance for residential building work; our trade business guide covers the thresholds.
• Land managers. Parks Victoria won't license a tour operator without $20 million of public liability.

Illustrative duty on a Victorian public liability quote: a $600 base premium plus $60 GST, with 7% duty on the GST-inclusive amount ($46.20), comes to $706.20. Revenue office pages don't all spell out whether GST sits inside the duty base, so check the tax lines on your own quote. Our public liability cost guide compares duty in every state.

What it roughly costs (as at October 2026)

Premiums vary enormously by occupation, turnover, location, claims history and sum insured. Every figure below comes from insurer and platform published data, not a quote for your business. Treat them as a sanity check, not a budget.

Sources and methods are in our guides to public liability costs, professional indemnity, sole trader insurance and workers compensation (figures checked 17 October 2026). Premiums are generally deductible business expenses; if you're registered for GST you claim the GST as a credit.

Before you ask for a quote: a preparation checklist

Insurers price what you tell them, and a wrong or missing answer can lead to a refused claim. Have these ready:

1. Who you are. Legal name, ABN, business structure and any trading names. The insured name should match your contracts and licences.
2. Every activity you do. Describe your occupation precisely, including side activities such as working at height, design work, installing products or work at airports, mines or rail sites.
3. Turnover and wages. Turnover for the next 12 months, wages by state for workers compensation, and payments to subcontractors and labour hire.
4. Where you work. Your premises and their security, plus whether you work at clients' homes or sites.
5. Required limits. The cover amounts and wording your licence, lease, council permits, marketplace and client contracts require, and any interested parties to be noted on the policy.
6. What you'd need to replace. Replacement values for contents, fit-out, stock, tools and portable equipment, and your gross profit for business interruption.
7. Products. What you make, import, own-brand, sell or install, and where it's sold.
8. Cyber controls. Whether you use MFA, offline backups, endpoint protection and email filtering.
9. History. Past claims and incidents, and for PI any complaints or circumstances that could become a claim, plus your retroactive date if you're switching insurers.
10. Your choices. The excess you could afford to pay several times a year, and whether you'll pay monthly or annually (some insurers charge more for monthly).

Then compare at least two quotes on the same limit, excess and products cover, and read the exclusions in each PDS.

Broker or direct?

Buying direct can suit a business that is simple and low-risk, where you know which covers you need and a standard occupation dropdown describes what you do. A sole-trader graphic designer buying PI and public liability may not need a broker.

A broker is worth considering when you have staff, premises, vehicles, contracts that specify wording and limits, an occupation the online forms don't fit, or a claims history. A broker's job is to understand your risks, find cover that fits and help at claim time. Brokers must hold an Australian financial services licence or be an authorised representative of a licensee. Most are paid commission by the insurer; some charge a fee instead or as well. Either way they must give you a Financial Services Guide explaining how they're paid. Online platforms such as BizCover generally act for their insurer partners rather than for you, so check who you're dealing with. The National Insurance Brokers Association runs a free broker search.

Whichever route you take, read the PDS for the exclusions rather than the brochure for the promises, and answer every question honestly. Non-disclosure is a common reason claims are refused. Three other claim-killers: describing your business too narrowly, using subcontractors without collecting their certificates of currency, and letting PI lapse between jobs.

Key takeaways

• Only workers compensation (once you employ) and CTP on vehicles are compulsory for most businesses; public liability and PI are mandated only for certain licensed occupations and regulated professions.
• Legally optional isn't practically optional: landlords, councils and clients will ask for $10m or $20m of public liability before you can work with them.
• The right mix depends on your business type: trades and health businesses lean on public liability, professional services on PI, online sellers and importers on product liability.
• Workers compensation is state-based. NSW and Victoria exempt employers paying $7,500 or less a year with no apprentices or trainees, SA's 2026–27 cut-off is $16,806, and the rest require cover from the first worker. It never covers the owner.
• Published 2026 figures: public liability typically $370–$840 a year, PI about $103 a month on average, and no reliable average for cyber, all heavily dependent on trade and turnover.
• Victoria's duty on business insurance is 7% for policies taken out or renewed from 1 July 2026, falling to nil from 1 July 2033.
• Prepare your activities, turnover, limits and claims history before quoting, compare like for like, read the PDS and disclose everything.

Where to get help

• business.gov.au: plain-English rundown of insurance types, which are compulsory, and links to every state and territory workers compensation regulator.
• Your state workers compensation regulator: icare and SIRA (NSW), WorkSafe Victoria, WorkCover Queensland, WorkCover WA, ReturnToWorkSA, WorkSafe Tasmania, WorkSafe ACT and NT WorkSafe publish who must register, thresholds and premium rates.
• State Revenue Office Victoria: the business insurance duty phase-out schedule.
• Moneysmart (ASIC): independent guidance on buying insurance, reading a PDS and checking a broker's or insurer's licence on the financial services registers.
• National Insurance Brokers Association (NIBA): free search for licensed brokers near you.
• Australian Financial Complaints Authority (AFCA): free dispute resolution if an insurer or broker refuses a claim you believe is covered.
• Your accountant for which premiums are deductible and how to structure income protection; your lawyer for the insurance clauses in leases and client contracts before you sign.
• The business insurance hub links all our insurance guides.

Plan how work will continue

Alongside cover questions, identify which activities need to recover first and put the decisions into a one-page interruption plan. Prepare a controlled fallback for unavailable online instructions and appointments, and work out your response to a critical supplier interruption. The risk and continuity hub brings these planning tasks together.