What Insurance Should a Small Business Consider?
There is no single insurance package that suits every Australian small business. The right mix depends on what the business does, who it deals with, its assets, employees, contracts and the risks it could reasonably face.
Start With Your Business Risks
Before choosing insurance, identify the events that could cause the greatest financial loss or interruption. A consultant working from home has different exposures from a café, trades business, retailer or technology company.
Common Types of Small Business Insurance
The following covers are commonly considered by Australian small businesses. Whether they are suitable depends on the individual business.
Public Liability
For certain claims involving injury to other people or damage to their property arising from business activities.
Explore Business Insurance → 📋Professional Indemnity
Important to consider when a business provides professional advice, designs, recommendations or specialist services.
Explore Business Insurance → 🏢Business Insurance Pack
Can combine selected property, contents, liability and other business covers into one policy package.
Explore Business Insurance → 💻Cyber Liability
Designed to address selected costs and liabilities associated with cyber incidents and data breaches.
Explore Business Insurance → 👔Management Liability
Can protect businesses and their management against selected management, employment and statutory liability exposures.
Explore Business Insurance → ➕Personal Accident & Illness
Can provide selected financial benefits where a covered accident or illness prevents the insured person from working.
Explore Business Insurance →Which Insurance May Be Required?
Some insurance can be compulsory or effectively required because of legislation, registration, professional rules or contracts. Requirements vary by state, territory, profession and business structure.
Registered vehicles are also subject to compulsory third-party personal injury arrangements, although the structure differs between states and territories. Separately, some professions must hold professional indemnity insurance to maintain registration or a licence, and clients or landlords may require particular liability limits under a contract.
Public Liability vs Professional Indemnity
| Feature | Public Liability | Professional Indemnity |
|---|---|---|
| Main risk | Third-party personal injury or property damage connected with business activities | Claims arising from professional advice or services, subject to policy terms |
| Common examples | Trades, retail, hospitality, events and businesses dealing with the public | Consultants, advisers and many professional service businesses |
| May be required? | Can be required by contracts, landlords or industry arrangements | Can be required by legislation, professional registration, membership or contracts |
What Should You Compare?
Do not compare policies on premium alone. Review the insured events, sums insured or liability limits, excesses, exclusions, sub-limits, optional covers, waiting periods where relevant, and the insurer's current Product Disclosure Statement or policy wording.
Explore Small Business Insurance Options
Policy Direct provides access to business insurance options through BizCover.
Frequently Asked Questions
Does every small business need the same insurance?
No. The cover a business should consider depends on its activities, risks, contracts, employees, premises, equipment and legal or professional requirements.
What is public liability insurance?
Public liability insurance is designed to help protect a business against certain claims involving third-party injury or property damage arising from business activities, subject to the policy terms.
Who should consider professional indemnity insurance?
Businesses and professionals who provide advice, designs, recommendations or professional services may need to consider professional indemnity cover. Some professions also have regulatory or contractual requirements.
What is a business insurance pack?
A business insurance pack can combine selected covers such as property, contents, theft, money, glass, machinery breakdown and liability. Available sections vary by insurer and occupation.
What is cyber liability insurance?
Cyber insurance can help with certain costs and liabilities arising from cyber incidents such as data breaches, network attacks or business interruption, depending on the policy.
What is management liability insurance?
Management liability can provide protection for certain claims involving directors, officers and management decisions, as well as selected employment or statutory liability exposures, subject to policy terms.
What is personal accident and illness insurance?
Personal accident and illness cover can provide selected benefits if an insured person cannot work because of a covered accident or illness. Benefits, waiting periods and exclusions vary.
Is workers compensation compulsory?
Workers compensation requirements are governed by each Australian state or territory. Businesses with workers should check the rules that apply in their jurisdiction and circumstances.
Does a business vehicle need insurance?
Registered vehicles are subject to compulsory third-party injury arrangements that vary by state or territory. Businesses should separately consider cover for vehicle damage, theft and third-party property damage.
Is professional indemnity compulsory?
It can be compulsory for some regulated professions or required by a professional body, licence, contract or client. Requirements depend on the occupation and circumstances.
Can a home-based business need insurance?
Yes. A home and contents policy may not cover all business activities, stock, equipment or liability exposures. Home-based businesses should check both their household and business insurance arrangements.
Does a sole trader need business insurance?
A sole trader can still face liability, property, cyber, professional and income-related risks. Appropriate cover depends on the work performed and the business's exposures.
How much public liability cover should a business have?
There is no single amount suitable for every business. Contract requirements, industry practices, business activities and the potential size of claims should be considered.
Should a small business choose insurance only by price?
No. Compare the insured risks, limits, excesses, exclusions, sub-limits, optional covers and insurer terms as well as premium.
How often should business insurance be reviewed?
Review cover at renewal and whenever the business changes materially, such as taking on employees, moving premises, buying equipment, signing major contracts or offering new services.