Sole Trader Insurance: Self-Employed Covers and Costs

Sole trader insurance isn't one policy. It's the set of covers a self-employed person chooses to match their work: usually public liability, professional indemnity if you give advice, cover for tools and vehicles, and personal accident or income protection for your own income. Workers compensation doesn't cover you as a sole trader, and with unlimited liability, an uninsured claim can be paid from your personal assets.

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 (TMD) before you buy, and consider advice from a licensed broker or adviser.

New to running your own business? Our guides to becoming a sole trader and the sole trader structure cover the set-up; this page is about protecting it.

Do sole traders need insurance?

What the law requires

Very little. Business.gov.au lists the most common compulsory covers as:

• public liability, which some states and territories require for certain occupations
• workers compensation, if you have employees
• third-party personal injury insurance (CTP) if your business uses vehicles, often paid as part of registration.

Add professional indemnity for regulated professions such as registered tax and BAS agents and migration agents; our professional indemnity guide lists them. A sole trader with no staff, no vehicle and no licensed occupation may be legally required to hold nothing at all.

Why most sole traders insure anyway

Business.gov.au is blunt about the structure: a sole trader has unlimited liability and all your personal assets are at risk if things go wrong. You and the business are the same legal person, so a judgment against the business is a judgment against you. If you're weighing a company instead, compare the trade-offs in sole trader vs company; a different structure doesn't remove the need for insurance.

The other reason is commercial. Builders, councils, landlords, market organisers, real estate agencies and online marketplaces often won't let you work without a certificate of currency, the insurer's proof that your policy is current.

Which insurance do you need? A decision table by type of work

This table shows which covers commonly apply to common kinds of sole trader work, and why. It's a starting point for conversations with an insurer or broker, not a recommendation for your business.

For industry-specific set-up costs and licences, see our guides to starting a trade business, cleaning business, personal training business, lawn mowing or gardening business, consulting business and bookkeeping business.

The business covers explained

Public liability

Public liability pays compensation and legal costs if your work injures someone or damages their property: a client trips over your extension lead, or paint lands on a customer's floor. It's the policy most sole traders end up holding. BizCover reports $10 million as the most popular limit among its customers, with others taking $5 million or $20 million. Our public liability guide explains limits and exclusions, and public liability insurance cost goes deeper on price.

Professional indemnity

Professional indemnity (PI) covers claims that your advice or professional service caused a client a financial loss, such as a bookkeeping error that triggers ATO penalties. It's written on a claims-made basis, so you need continuous cover and run-off when you stop. See our professional indemnity guide.

Product liability

If you make, import or sell goods, you can be liable for injury or damage your products cause. It's usually included in public liability as "public and products liability", but check your schedule. Importers carry extra risk under the Australian Consumer Law; see product liability insurance.

Tools and portable equipment

Business.gov.au distinguishes two covers. Portable equipment insurance covers accidental loss, damage or theft of tools and electrical equipment you take on a job. Electronic equipment insurance covers breakdown, loss or damage at a specific location, but not theft. AAMI and GIO both offer portable items cover in their sole trader packs; GIO says items under $2,500 don't need to be listed individually. Check the conditions for theft from a vehicle, and insure at replacement cost.

Commercial vehicle

CTP covers injury to people and comes with registration. It doesn't cover your vehicle or other people's cars. AAMI and GIO offer commercial motor cover in three forms: comprehensive, legal liability with fire and theft, and legal liability only. Whatever you buy, tell the insurer the vehicle is used for work and what you carry. Keep the logbook and expense records the ATO expects too.

Other covers to consider

• Contents and stock if you have a shop, studio or workshop.
• Business interruption, which pays ongoing costs after an insured event such as a fire; pair it with a one-page interruption plan.
• Tax audit cover, which AAMI and GIO offer to pay professional fees if the ATO audits you.
• Cyber insurance if you hold client data or take payments online.

Covering your own income: personal accident vs income protection

When an employee breaks a wrist, workers compensation and sick leave keep money coming in. When a sole trader breaks a wrist, the income stops. Two products fill the gap, and they're easy to confuse.

Benefit levels, periods and costs checked 17 October 2026.

Personal accident and illness suits people who mainly worry about short and medium-term injuries, and can be bought quickly with business insurance. Income protection suits people who want cover for long illnesses or injuries that keep them out of work for years, and it usually involves more underwriting. Some people hold both. Whichever you look at, ask what income figure the insurer will use and what records you'll need to prove it, because a sole trader's income can swing from year to year.

Worked example: the ATO's split-premium rule (illustrative)

The ATO's example: Deanne pays $250 a month for a policy combining income protection ($175) and personal injury cover ($75). She can claim $175 a month. The $75 isn't deductible because it buys a capital benefit.

Apply the same logic to a personal accident and illness policy with an accidental death lump sum: ask the insurer to show how much of the premium buys the weekly benefit and how much buys the lump sum, and claim only the income-replacement part. For the rest of what you can claim, see sole trader tax deductions.

Life and TPD cover through super

Most super funds offer life cover, total and permanent disability (TPD) cover and sometimes income protection, with premiums deducted from your balance. Moneysmart's rules worth knowing:

• Most funds give life and TPD cover automatically from age 25, without medical checks.
• Cover doesn't start automatically for new members under 25 or with balances under $6,000, unless you ask.
• By law, funds cancel insurance on accounts with no contributions for at least 16 months. Your fund will contact you first.
• TPD in super usually ends at 65 and life cover at 70.
• Premiums reduce your retirement savings.

That 16-month rule matters to sole traders, because no employer pays super for you. If you've stopped contributing, your old employer fund's insurance may lapse without you noticing. Log in, check your cover, and either contribute or tell the fund you want to keep it. Our guide to super for sole traders covers contributions and the deduction. Life, TPD and trauma premiums paid personally aren't tax deductible.

Workers compensation for sole traders

Workers compensation covers employees. It doesn't cover the owner of a sole trader business, and business.gov.au says you'll need your own accident and sickness or similar insurance instead. The details differ by state.

Rules checked 17 October 2026.

Two traps catch sole traders:

• Hiring help. The moment you pay someone, even casually, you may need a policy. NSW and Victoria exempt employers paying $7,500 or less a year in wages with no apprentices or trainees (NSW also excludes businesses in a group). icare's own example: two tilers in a partnership who hire an apprentice must insure the apprentice, but the policy doesn't cover the two partners. See our workers compensation guide for every state.
• Being someone else's "deemed worker". If you work mainly for one business, under its direction, paid by the hour, you might count as that business's worker under workers compensation law, even with an ABN. icare notes that contractors and subcontractors can be counted as workers. Read employee vs contractor for how the test works.

Contracts that demand insurance

Even when the law is silent, the people you work with often aren't:

• Head contractors and builders typically want a certificate of currency for public liability at a set limit before you go on site.
• Councils and market organisers ask for public liability before issuing permits or stall sites.
• Landlords often require public liability and contents insurance as a lease condition. Read our commercial lease guide before you sign.
• Online marketplaces set their own rules. Amazon Australia requires $1 million of liability cover including products once a seller's gross proceeds exceed $10,000 a month for three consecutive months (checked 17 October 2026).
• Corporate and government clients often require professional indemnity at a stated limit, and sometimes for years after the contract ends.

When you sign, check that the name on your certificate of currency matches the contracting party, that the limits match, and that you send a fresh certificate after each renewal. Be wary of clauses that make you accept liability beyond what the law imposes; they may fall outside your cover. Our guides to unfair contract terms and business contracts explain what to look for. If you work from home, also check whether your home and contents policy covers business equipment and client visits; see home-based business rules.

What does sole trader insurance cost?

No insurer publishes a single "sole trader insurance" price, because it depends on which covers you buy. These are the most useful published figures we found, all from BizCover, an online intermediary reporting its own customers' averages or platform quotes (checked 17 October 2026):

Illustrative first-year budgets

These use the published figures above, multiplied by 12. They mix averages and starting prices from different years, so treat them as a sense of scale, not a quote.

What drives your premiums

• Occupation. Insurers price on your trade's claims history; a scaffolder and a bookkeeper pay very different amounts.
• Turnover and staff. More work and more people mean more chances of a claim.
• Limits and excess. Higher limits cost more; a higher excess costs less.
• Location. Stamp duty on premiums ranges from 0% to 11% depending on your state, according to BizCover.
• Claims history. Past claims raise premiums.
• For income cover: your age, job, health, smoking status, waiting period and benefit period.

Business insurance premiums are generally deductible. The ATO lists accident or disability, professional indemnity, public risk, motor vehicle and loss of profits insurance among business operating expenses. Put the total into your pricing with our guide to calculating your hourly rate.

Your first-year insurance checklist

Before your first job

• Check whether your licence, registration or professional body requires a specific cover and limit.
• Decide on public liability, and professional indemnity if you're paid for advice or design.
• If you sell goods, confirm products cover is included.
• Describe your work accurately on every application; an occupation that's too narrow can sink a claim.
• Save your certificates of currency where you can send them to clients quickly.

In your first month

• Insure tools, laptops and cameras at replacement cost, and check theft-from-vehicle conditions.
• Tell your vehicle insurer about business use.
• Decide how you'd pay the bills for three months if you couldn't work, then price personal accident and illness or income protection.
• Check your super fund's insurance and whether your account is at risk of the 16-month cancellation rule.

Before you hire anyone

• Check your state's workers compensation rules and register before the start date.
• Collect certificates of currency from any subcontractors.

At tax time

• Claim business insurance premiums, and only the income-replacement part of personal cover.
• Keep policy schedules and receipts with your business records.

At every renewal

• Update turnover, services, equipment values and contracts.
• Recheck limits against what clients and landlords now require.
• Tell the insurer about any incidents or complaints before the policy ends.

Key takeaways

• A sole trader has unlimited liability, so an uninsured claim can be paid from your house and savings. Insurance is how most self-employed people manage that risk.
• The law rarely requires a sole trader to insure: public liability only for some licensed occupations, CTP with vehicle registration, workers compensation once you employ, and PI for regulated professions.
• Workers compensation does not cover you. In NSW and Victoria you cannot cover yourself under the scheme; Queensland offers optional Workplace Personal Injury Insurance.
• Personal accident and illness pays a weekly benefit for shorter periods; income protection replaces a percentage of income for longer. Income-replacement premiums are generally deductible.
• Life and TPD cover in super can be cancelled if your account gets no contributions for 16 months, a real risk for sole traders who do not pay themselves super.
• Published averages: public liability $39 a month, PI $83 a month with no staff, personal accident and illness $115 a month (BizCover data, checked 17 October 2026).

Where to get help

• business.gov.au: insurance types, compulsory covers and links to every state's workers compensation regulator (types of business insurance).
• Your state workers compensation regulator: icare (NSW), WorkSafe Victoria, WorkCover Queensland, WorkCover WA, ReturnToWorkSA, WorkSafe Tasmania, WorkSafe ACT and NT WorkSafe.
• Moneysmart (ASIC): independent guidance on income protection and insurance through super.
• ATO: what you can deduct for income protection and other business insurance.
• Australian Financial Complaints Authority (AFCA): free dispute resolution if an insurer refuses a claim (afca.org.au).
• A licensed insurance broker or financial adviser: for combining covers, unusual work or income protection.

Related tasks

Find more insurance guides on the business insurance topic hub.