Business insurance

Before you choose an insurance policy, you'll need to evaluate your insurance needs. Look at each type of insurance and work out if it’s something that your business needs. Some insurers also offer insurance package policies specially tailored for different business types.

The types of insurance vary and usually protect things like:

• business assets
• customers
• employees
• business owners
• your earnings

Please note: this is general information only and should not replace financial advice. Talk to a licenced insurance broker, business advisor or insurer for detailed advice. You can check your insurance broker’s license on the Australian Securities & Investments Commission's professional register.

 

Some forms of insurance are compulsory for Australian businesses, such as:

• Workers’ compensation insurance – compulsory if you have employees.
• Public liability insurance – covers you for third party death or injury, compulsory for certain types of companies.
• Third party personal injury insurance – compulsory if you own a motor vehicle. This is often part of your vehicle registration fee.

If a work-related accident or illness occurs, your workers should be able to get:

• first aid
• workers' compensation
• return-to-work rehabilitation (under work health and safety law)

As an employer, you need to have workers' compensation insurance to cover you and your workers against financial hardship due to an accident or illness.

In most cases, you must provide accident and sickness insurance for your employees or workers’ compensation through an authorised insurer.

Workers compensation for contractors

If you’re an independent contractor, you may require your own insurance. See our contractors topic for more information.

If you employ a contractor for your business, check with the workers' compensation authority in your state or territory

Workers compensation for sole traders

As a sole trader, you can’t cover yourself as an ‘employee’ with workers’ compensation insurance. So you’ll need to consider your own personal death, illness and disability insurance.

You can cover yourself for accident and sickness insurance through a private insurer. This policy will compensate you for loss of revenue while you recover.

There are several types of personal insurance. Some are investment-type funds where you contribute over a certain time and get money at the maturity date. Others cover things that could happen to you:

• Income protection or disability insurance – covers part of your normal income if you’re unable to work through sickness or accident.
• Life insurance – provides a lump sum or series of payments if you die, or in some cases, if you’re permanently injured.
• Total and permanent disability insurance – provides a lump sum only if you’re permanently disabled before retirement.
• Trauma insurance – provides a lump sum if you have a specified life-threatening illness.
• Business interruption or loss of profits – covers you if your business suffers from damage to property by fire or other insured dangers. It can help you pay your ongoing expenses and maintain profits.
• Management liability – covers your personal assets when a manager or director acts in an illegal or unethical way that cause losses to individuals or businesses.
• Employee dishonesty – covers losses from employee theft or fraud.

If you have important business assets, property, stock or products you can’t afford to lose, consider some of the following insurance options:

• Building and contents – covers your building, contents and stock against events like fire, earthquake, lightning, storms, floods, impact, malicious damage and explosion.
• Burglary – insures your business assets against burglary. Consider this if you’re a retailer or have a business property that is not always staffed.
• Deterioration of stock – covers your business when chilled, refrigerated or frozen stock rots following the breakdown of a refrigerator or freezer.
• Electronic equipment – covers your electronic items from theft, destruction or damage.
• Farm insurance – covers things such as crops, livestock, buildings and machinery.
• Goods in transit – covers the goods you buy, sell or use in your business during transport.
• Machinery breakdown – protects your business when mechanical and electrical plant and machinery at the work site break down.
• Tax audit – covers you for the cost of fees due to a tax audit or investigation into your business.
• Property in transit – covers theft or damage of items you transport with you for business, such as tools and equipment.

Liability insurance protects you if you’re liable for damages or injuries to another person or property. Although it's mostly optional, you might want to consider it for your business if the likelihood of legal action is high. In some industries, liability or professional indemnity insurance is mandatory before you can legally operate. Check our Industry information to learn more about your industry or talk to your industry association.

The types of liability insurance available vary and some may be more relevant to your industry. Find out more about liability insurance options below.

Management liability insurance

This covers your assets when a manager or director uses illegal or unethical management practices that cause losses. The losses may be to individuals or businesses. Management liability insurance is fairly complex and most policies have many levels of cover. Policies are often available as a package and can also cover:

• directors’, officers’ and trustees’ liability
• employment practices liability
• government fines or tax audit cost
• cyber and privacy liability
• private capital raisings

Talk to your insurance broker or authorised insurer about suitable options for your business.

Product liability insurance

If you sell, supply or deliver goods, even in the form of a repair or service, you may be liable if your products cause:

• injury or death
• property damage
• nervous shock, such as emotional distress or a recognised psychiatric illness

Product liability insurance covers you if any of these events happen to another business or person when your product fails.

Professional indemnity insurance

Professional indemnity insurance helps cover the cost of legal action due to your professional advice. It may cover breaches of contract such as

• not achieving the results of a contract (for example, not building a boat on time)
• providing negligent advice (for example, giving bad financial advice or the wrong dietary advice)

It may also cover mistakes providing a service, such as

• not auditing a company’s accounts properly
• medical malpractice when performing a surgical procedure
• giving poor legal advice

Check with your professional associations - they sometimes offer industry-specific indemnity insurance at a much lower cost.

Public liability insurance

Public liability insurance covers you for third party death or injury. It helps protect you and your business when you’re liable for negligence. For example, if your business causes:

• injury or death, such as your food making a customer sick
• negligent advice (for some occupations), such as saying a generator can power a business in a blackout and it doesn’t, causing a loss
• nervous shock, such as emotional distress or a recognised psychiatric illnesses
• property damage, such as causing a fire
• consequential loss, which occurs in very rare cases where negligence causes another business to lose expected revenue

As technology grows, so does the insurance cover needed to protect against new risks to these devices. Insurance options include:

• electronic equipment insurance – covers your electronic items from theft, destruction or damage
• cyber liability insurance – protects your business against cybercrime. Insurance covers the cost of keeping your data secure as well as the expenses from the disruption to your business. Talk to an insurance broker or insurer about your options. Read more about cyber security and how to protect your business from cyber threats.

Find information on insurance and workers’ compensation in your state or territory.