Australia is a nation of small businesses, with over 2.5 million actively trading as of June 2022.1 And many of these businesses are everyday Aussies going it alone. Over 798,000 entrepreneurs are registered as sole traders—the fastest-growing sector in the country.

It’s not hard to imagine why becoming a sole trader is so popular. Sole traders enjoy heaps of working freedom, from setting their own schedule to choosing the customers they want to work with. Sounds pretty perfect, right?

While there are many upsides to being a sole trader, there’s also a lot of responsibility. When something goes wrong, it’s up to you to fix it. This often means unexpected bills (and possibly a few headaches). Luckily, insurance for sole traders can help you manage the ups and downs of running your own business.

This two-part series covers common types of insurance for sole traders that could help you protect the business you’re building.

What is a sole trader?

A sole trader (sometimes called a sole proprietor) is the simplest type of business you can form in Australia. Typically, a sole trader is just one person working for themselves. They are responsible for all parts of their business and make the day-to-day decisions that keep things running smoothly.

Almost anyone can become a sole trader, including:

  • Bookkeepers
  • Cleaners
  • Consultants
  • Hair stylists
  • Personal Trainers
  • Real estate agents
  • Tradies
  • Yoga teachers

If you’ve got the skills and drive to run your own business, then becoming a sole trader might be for you!

Why is sole trader insurance important?

Remember when we mentioned that sole traders are responsible for all parts of their business? That includes more than just perks like setting your own hours and calling the shots. If something goes wrong, it’s also your job to set things right.

Unfortunately, this creates problems for many sole traders. An accident in your shop, a mistake in your work, or outside events might lead to unplanned bills or lawsuits. It could become very expensive to fix the problem or carry on with business as usual.

That’s where insurance for sole traders can help. There are various types of cover available to shield your finances if trouble comes for your small business. Having coverage for common risks may mean the difference between staying in business or closing up shop for good.

What insurance does a sole trader need?

There are many types of insurance you might consider to protect your small business. Let’s take a closer look at one coverage that many sole traders choose to address some of the most common small business risks.

Public Liability

When you’re running a small business, anything can happen. No matter how careful you are, something as simple as a customer tripping and falling in your workplace could lead to an injury lawsuit or compensation claim. This can be a stressful situation for a sole trader!

Thankfully, Public Liability insurance could help protect your bank accounts and take some of the worry out of being a sole trader.

Public Liability insurance is designed to provide protection for you and your business in the event a customer, supplier or a member of the public brings a claim against you due to their being injured or sustaining property damage as a result of your negligent business activities.

A Public Liability policy is an essential type of sole trader insurance for many small businesses. Instead of dipping into your own pocket to pay things like your legal fees, repair or replacement costs, and other calls for compensation.

Public Liability cover snapshot

A Public Liability policy provides sole traders with important business coverage.

What’s typically coveredWhat is not typically covered
Personal injury suffered by third parties (e.g., a customer, supplier, or member of the public)Damage to a third party’s property caused by your negligent business activitiesYour legal and defence costs related to covered claimsEvents occurring before or after the policy periodPersonal injuries to you or your employeesAdvertising InjuryDamage to your own propertyCosts of correcting faulty workmanshipProfessional negligence or illegal activityReckless or wilful failure to take careContractual liabilityAsbestosPollution

Every Public Liability policy is different. Check your policy documents to understand exactly when you are covered and when you are not.

Why do sole traders consider Public Liability insurance?

Sole traders working in just about every industry may consider getting a Public Liability policy. Because it covers two very common business risks, it may benefit a wide range of sole traders, from tax agents and carpenters to engineers and massage therapists.

Here are a few reasons why sole traders choose Public Liability cover for their businesses:

  • They lease commercial space – You may be required to have Public Liability insurance if you rent space for your business, such as an office, retail shop, or workshop.
  • It’s required – Some sole traders may be required to have a Public Liability policy to work. This may be mandated by local or federal law or part of a business contract.
  • They want to protect their bank accounts – Injury and property damage claims can be expensive. It’s not uncommon for sole traders to go into debt, declare bankruptcy, or lose their business as a result of a claim. Public Liability insurance helps prevent these events.

Stay tuned for part 2

Public Liability insurance is an important form of sole trader insurance for many small businesses. But it’s not the only coverage you might consider. In our next instalment, we’ll look at two policies that can help you address other risks that sole traders often face.

Compare insurance for sole traders with Public Liability Australia and get instant coverage today!

1. ABS, Counts of Australian Businesses, including Entries and Exits, accessed 16 Feb 2023.

This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. 

© 2023 BizCover Pty Limited, Public Liability Australia is a business name of BizCover Pty Ltd (ABN 68 127 707 975; AFSL 501769)