Small business insurance explained

Building a business up from nothing and seeing it thrive is the ultimate reward for any small business owner. But as with most things in life, it doesn’t come without risk.

Business face risks from all kinds of things, like natural disasters and emergencies, staffing issues, thefts and burglary, and more. To mitigate some of these risks, business owners may choose to take out insurance to help keep their business afloat in case certain things go wrong that could impact their operations or cash flow.

Tip: Always check the Product Disclosure Statement (PDS) for what is and isn’t covered by a business insurance policy. It can also help you understand what limits apply, conditions you should be aware of, and how certain claims might be settled.

While some policies are optional for business owners, others may be required by law. It all depends on the location and type of business you’re running. 

Here’s a summary of some of the different types of insurance policies available for small business owners, and what they’re for:

• Public liability insurance can help protect against claims for injuries or property damage caused by a business’s negligence. Some businesses need this to operate. 
• Workers compensation insurance can help cover claims for work-related injuries and illnesses. This is usually required if you have employees working for you.
• Professional indemnity insurance can help cover the cost of certain legal disputes, claims or costs arising from mistaken or omitted advice or services provided by your business.
• Third Party personal injury insurance is usually needed if your business uses a motor vehicle to carry out a service.

Tip: Workers' compensation doesn’t cover sole traders, because they’re not classified as ‘employees’. If you’re a sole trader, you might want to consider getting personal insurance in case you’re no longer able to work due to disability, illness or death. 
 

After familiarising yourself with the different types of risks your business face and the insurance available, you may choose to speak with a licensed insurance broker, insurer or business adviser for advice that’s specific to the business you’re running. They can help you understand what risks might apply to your business, and what types of cover to consider to help mitigate those risks.

Tip: Find a business adviser or industry expert using the adviser finder at business.gov.au.   

Because each business has different needs and requirements, there’s no ‘standard’ price when it comes to insurance. The quickest way to get an estimate of how much your insurance might cost is to get a quote. 

Tip: General business operating expenses, including insurance premiums, may be tax deductible. Ensure you keep accurate and up-to-date records and always speak to a tax expert for individualised advice.