Business insurance

Having the right insurance can help to protect your business, your customers and your income. Understand the different types of insurance and which ones you need for your business.

• Types of business insurance
• Compulsory insurance
• Workers compensation insurance
• Personal or loss of income insurance
• Stock, products and asset insurance
• Accident and liability insurance
• Technology and cybercrime insurance
• Insurance in your state or territory

Types of business insurance

Your business may require certain types of insurance, either:

• by law (such as workers' compensation insurance), or
• because people you deal with may require it (such as public liability insurance to get a market stall).

Other types of insurance are your choice, but can be an important way to reduce business risk and protect things like your:

• business assets (such as equipment, premises and stock)
• customers
• employees
• business owners
• earnings.

We've provided some information to help you understand types of insurance on this page. This should not replace professional financial advice.

Get advice on types of insurance

Look at each type of insurance and consider if it’s something that your business needs. Talk to a licenced insurance broker, business advisor or insurers for advice. You can check an insurance broker’s license on the Australian Securities & Investments Commission's professional register.

Ask insurers if they offer insurance packages tailored for business types. These can be cheaper than taking out separate insurance policies.

Compulsory insurance

Some forms of insurance are required by law.

• Workers’ compensation insurance is compulsory if you have employees.
• Third party personal injury insurance is compulsory if you own a motor vehicle. This is often part of your vehicle registration fee.
• Public liability insurance covers you for third party death or injury, and is compulsory for certain types of companies.

Workers' compensation insurance

As an employer, you must have workers' compensation insurance to cover you and your workers against financial hardship due to an accident or illness. In most cases, you must provide workers’ compensation through an authorised insurer.

Rules vary between states and territories, so check with the relevant regulator for requirements.

Contact the workers' compensation regulator in your state or territory for advice.

Find authorised general insurers on the Australian Prudential Regulation Authority’s (APRA’s) register.

Workers' compensation for contractors

If you’re an independent contractor, you may require your own insurance. See our contractors topic for more information.

If you employ a contractor for your business, check with the workers' compensation authority in your state or territory.

Workers' compensation for sole traders

As a sole trader, you can’t cover yourself as an ‘employee’ with workers’ compensation insurance. So you’ll need to consider your own personal death, illness and disability insurance.

You can cover yourself for accident and sickness insurance through a private insurer. This policy will compensate you for loss of revenue while you recover.

Personal or loss of income insurance

There are several types of personal insurance. Some are investment-type funds where you contribute over a certain time and get money at the maturity date. Others cover things that could happen to you.

• Income protection or disability insurance covers part of your normal income if you’re unable to work through sickness or accident.
• Life insurance provides a lump sum or series of payments if you die, or in some cases, if you’re permanently injured.
• Total and permanent disability insurance provides a lump sum only if you’re permanently disabled before retirement.
• Trauma insurance provides a lump sum if you have a specified life-threatening illness.
• Business interruption or loss of profits insurance covers you if your business suffers from damage to property by fire or other insured dangers. It can help you pay your ongoing expenses and maintain profits.
• Management liability covers your personal assets when a manager or director acts in an illegal or unethical way that cause losses to individuals or businesses.
• Employee dishonesty covers losses from employee theft or fraud.

Stock, products and asset insurance

If you have important business assets, property, stock or products you can’t afford to lose, consider some of the following insurance options:

• Building and contents insures against events like fire, earthquake, lightning, storms, floods, impact, malicious damage and explosion.
• Burglary insurance covers your business assets, Consider this if you’re a retailer or have a business property that is not always staffed.
• Deterioration of stock will cover your business when chilled, refrigerated or frozen stock rots following the breakdown of a refrigerator or freezer.
• Electronic equipment covers your electronic items from theft, destruction or damage.
• Farm insurance covers things such as crops, livestock, buildings and machinery.
• Goods in transit covers the goods you buy, sell or use in your business during transport.
• Machinery breakdown protects your business when mechanical and electrical plant and machinery at the work site break down.
• Tax audit covers you for the cost of fees due to a tax audit or investigation into your business.
• Property in transit covers theft or damage of items you transport with you for business, such as tools and equipment.

Accident and liability insurance

Liability insurance protects you if you’re liable for damages or injuries to another person or property. Although it's mostly optional, you might want to consider it for your business if the likelihood of legal action is high. In some industries, liability or professional indemnity insurance is mandatory before you can legally operate. Check our Industry information to learn more about your industry or talk to your industry association.

The types of liability insurance available vary and some may be more relevant to your industry. Find out more about liability insurance options below.

Management liability insurance

This covers your assets when a manager or director uses illegal or unethical management practices that cause losses. The losses may be to individuals or businesses. Management liability insurance is fairly complex and most policies have many levels of cover. Policies are often available as a package and can also cover:

• directors’, officers’ and trustees’ liability
• employment practices liability
• government fines or tax audit cost
• cyber and privacy liability
• private capital raisings.

Talk to your insurance broker or authorised insurer about suitable options for your business.

Product liability insurance

If you sell, supply or deliver goods, even in the form of a repair or service, you may be liable if your products cause:

• injury or death
• property damage
• nervous shock, such as emotional distress or a recognised psychiatric illness.

Product liability insurance covers you if any of these events happen to another business or person when your product fails.