How to check what business insurance you actually need

I'm a sole trader. Which of these four cover types apply to me, and which are just upsells?

Start with what could actually go wrong

Most owners start by comparing prices, then work out afterwards which section of the policy they bought. It is faster to invert that: list the things that would genuinely hurt if they went wrong, and only then decide which cover types answer them.

For a sole trader working on your own, that list is usually short. The four cover types below come up in almost every conversation we have on this site.

Public liability

This answers: “someone else got hurt or their property was damaged because of my work.” business.gov.au lists public liability among the insurances you may need by law, noting that some states and territories require it for certain occupations. In practice it responds to third-party claims, not to problems with your own work, and for any business that visits client premises it is close to non-negotiable. It is also the cover most head contractors and site managers ask to see evidence of.

Business pack

This answers: “my own stuff is damaged or I cannot trade.” A business pack bundles cover for your business property and equipment with optional sections such as business interruption. business.gov.au describes business interruption cover as paying your ongoing business costs if an insured event interrupts your business, such as a fire damaging your business property. The important thing to check is which sections are actually included in the pack you are being offered, and at what limit — a pack sold as “trades insurance” does not automatically include public liability.

Professional indemnity

This answers: “a client says the advice or service I sold was wrong and I have to pay for the loss.” business.gov.au describes professional indemnity insurance as helping cover the cost of legal action from claims against your professional advice or services, including mistakes, neglect or breaches of contract. If you are a sole trader in consulting, bookkeeping, agency, or allied health, PI is frequently required by your contract even when your clients are individual consumers rather than companies.

Tool and equipment cover

This answers: “my tools are stolen or damaged, away from my premises.” If you work from a van or a ute, this is the one that matters most, and it is where policy wording does the most work. Ask specifically whether tools are covered away from your insured address, and whether cover is written on a list of specified items or on open unscheduled cover — the two are set out as separate things in a business pack wording. That distinction, and any unattended-vehicle exclusion, is exactly the kind of thing to read before you buy, not after.

A quick self-check. If you can answer all four of these in one sentence each, you are probably in decent shape. If any of them is a shrug, that is the gap worth closing first — and it is exactly the kind of thing to raise with a licensed broker.

Who could claim against me for damage I caused on their site, and for how much?
If my main tool vanished from the ute tonight, who pays?
If a client says my advice cost them money, who pays?
If I cannot trade for a month, which section covers that?

What is not on this list, and why

Two common candidates are missing because they depend on facts we cannot assume. Workers compensation is legislated separately in every state and territory, and whether it applies to you turns on your state, your employee count, and how the work is classified — it is not a section you buy inside a business pack. Cyber liability depends on whether you hold personal or customer information, and on what your obligations are under the Privacy Act. Both are real; neither is universal. Ask about them in the conversation and you will get a straight answer.

What to do next

Once you know which cover types fit, the next step is pricing. We do not quote and we do not sell policies — a licensed broker can price the cover types you have identified and show you where the trade-offs are. Bring this list to them; it makes the conversation shorter and the quotes easier to compare.

Get quotes to compare

Some pages contain a referral link to BizCover. If you use it and take out a policy, we may receive a commission at no extra cost to you. Referral arrangements do not influence which cover types we explain or how we explain them.

Sources

Owners often buy a bundle before knowing which section answers which risk, so they either pay for cover they never need or are uninsured for the one that mattered.

coverage.chat provides general information about business insurance. We are not an insurer, broker, or financial adviser, and we do not hold an Australian Financial Services Licence. Nothing here is personal advice, a quote, or a recommendation to buy a particular policy. Read the Product Disclosure Statement and speak with a licensed broker before you decide.