Insurance for Small Business in Australia: What Owners Need to Know
Insurance isn’t optional for many businesses
Some types of insurance are mandatory by law in Australia. The rest are voluntary, but going without them can let a single incident destroy a business you spent years building.
Insurance isn’t an exciting topic when you’re just starting out, but it is one of the simplest risk-versus-benefit decisions in business: an annual premium is far smaller than the cost of a lawsuit or a serious accident.
Workers compensation — mandatory when you have employees
Workers compensation insurance is mandatory under state/territory law if you have employees. It pays out when an employee is injured or develops an occupational illness while working for you.
The workers compensation system differs between states — NSW, VIC, QLD, WA, SA, and TAS each have their own regulator and their own requirements. Check with your state’s workers compensation authority when you hire your first employee.
Not having workers compensation when you have employees is against the law — and if an accident happens, you bear all the medical and compensation costs.
Public liability insurance
Public liability insurance protects you if your business causes injury to another person or damage to someone else’s property. For example: a customer slips and falls in your shop, or your work damages a neighbour’s house.
It is not mandatory under national law (except in some specifically regulated industries), but many landlords require it when you sign a lease, and many contracts with large customers require a minimum level of cover.
This is insurance that almost every business with physical interaction with other people should have.
Professional indemnity insurance
This is for businesses that provide professional services or advice — accounting, design, IT, healthcare, education, law. It protects you if a customer claims that your advice or work caused them financial loss.
It is mandatory for some licensed professions (for example, migration agents, financial advisers, real estate agents). Check the specific rules for your industry.
Business interruption insurance
Business interruption insurance covers lost revenue if your business has to pause due to an insured event — fire, natural disaster, or other events depending on the policy terms. It is especially important for a business that depends on a single physical location.
Product liability insurance
If your business manufactures, imports, or sells physical products, product liability protects you if that product causes injury or damage. It is often bundled into public liability for an extra premium.
Property insurance
This protects your business’s physical assets — equipment, inventory, fixtures and fittings. If you lease your premises, the landlord usually insures the building’s structure, but your contents and equipment are your responsibility.
Cyber insurance
This is newer but increasingly important if your business stores customer data or takes electronic payments. It protects you from the costs after a security incident — notifying customers, recovering data, and legal expenses.
How to get started
There is no “one size fits all” insurance package. The right level of cover depends on your industry, your size, your business’s specific risks, and the requirements of your landlord or customers.
Start by working out: (a) which types are mandatory in your industry and state, and (b) which types your landlord or customers require. Then talk to an insurance broker who specialises in business insurance — they don’t charge a consultation fee (they are paid a commission by the insurer) and they help you compare policies.
Buying insurance directly online isn’t always wrong, but for your first business insurance, a broker helps you avoid coverage gaps you don’t know you have until you need to claim.