Sole Trader Insurance - 4 Risks Sole Traders Must Cover Now (2024)

Sole Trader Insurance Explained and Organised Properly

No matter what your occupation, we can organise proper insurance for you that is cost-effective

Sole Trader Insurance is not complicated

Insurance can sound complicated when you’re just starting out and due to lack of knowledge many people have wondered – Do I need Sole Trader Insurance?

You need to understand a few things which will empower you to decide & get the right insurance at a cost effective price.

With the right understanding you will also be able to explain to the insurance broker what specific coverage you need and help them help you in finding the right policy.

What Insurance do I need as a sole trader?

The first question in everyone’s mind about insurance when they are just starting out is – What Insurance Do I Need As A Sole Trader?

A Sole Trader operating on an ABN is a small business.

A business faces many different types of risks and once you break them down into manageable chunks, it is easy to answer – “What insurance do i need as a sole trader?”

For a Sole Trader, the key risks to manage are:

• Liability Risks – Claims of financial loss for damaging other’s property or causing injury
• Personal Injury & Sickness Risk – Loss of income due to your injury or sickness
• Property Risk – Loss or theft of your equipment, tools, stock or other property
• Vehicle Risk – Damage or theft of vehicle or third party liability claims.

The following is a list of insurances to consider for sole traders:

• Public Liability Insurance for Sole Traders
• Personal Injury Insurance for Sole Traders
• Tools Insurance for Tradies
• Commercial Vehicle Insurance

Let’s go into a little more detail for each one of these insurances and how they help you manage the business risks that sole traders face.

Sole Trader Public Liability Insurance

Sole Trader Public Liability Insurance is probably the first insurance you will end up taking when you start your business.

Other businesses that you might subcontract to will usually ask for a copy of your insurance certificate.

The customers that you work for might also ask for a certificate of currency.

This insurance is to protect you against financial claims, should you end up causing a damage to someone’s property or an injury to others.

Frankly speaking, this insurance is really important but there are plenty of “cowboys” who keep operating without this insurance, either deliberately to save money or for lack of understanding of the importance of this insurance.

Sole Trader Liability Insurance

Claim Examples

Sole Trader Liability Insurance is very important, below we see two real life claim examples:

Handyman

As a Handyman working for Real Estate Property Managers, you were at a property trying to fix a kitchen window which was jammed. It was an old property and the window hadn’t been opened in ages.

Opening it without a lever was impossible so you use a long crowbar levering off the kitchen bench-top. The next thing you hear is a cracking sound and the stone bench-top has cracked.

The owner demands compensation, your sole trader public liability insurance comes in handy.

Plumber

You installed a new dishwasher at a new home under construction. Over the course of the weekend the connection fitting from the dishwasher to the isolation valve started to leak.

The leakcaused damage to the adjoining joinery unit. The builder has requested thatthe damaged areas be replaced.Public Liability Insurance for Sole Traders is a must in a situation like this so your claim can be paid.

The likely risks that you face are going to be different than what other trades might face. A Discussion with one of our brokers can be helpful in finding just the right insurance specific to your occupation.

Sole Trader Insurance Requirements

Sole Trader Insurance Requirements are generally dependent on your occupation and the state that you operate in.

Occupations that require you to obtain & maintain a license to operate or trade are likely to have certain insurance requirements that you must meet. Some of the example occupations are:

• Electricians
• Plumbers
• Air-conditioning Installers
• Pest Controllers etc.

Even if the relevant government bodies may not have a requirement for you to obtain Sole Traders Liability Insurance before you are allowed to trade, it is important that you do to cover your own risk.

For those occupations that do have requirements listed by government organisations, these requirements can vary between different states even for the same trade. Lets look at some of the special cases below but it is not a complete list:

Sole Trader Insurance Australia

No matter what your trade and wherever you are in the country, we can sort out your insurance.

Sole Trader Insurance Victoria

In Victoria, most Sole Traders will start off with $5 Million sole trader liability insurance. As your business expands, you are likely to pick up bigger jobs and start working as contractors to other businesses that have higher limits on their public liability insurance.

Those businesses will often expect you to have insurance limits that are similar to theirs before they give you work.

In Victoria, Plumbers are required to have a minimum of $5 Million public liability insurance along with $50,000 consumer protection cover. So if you are a plumber in Victoria, you need to consider this. Read more about in our Victorian Plumbers Insurance guide.

Sole Trader Insurance QLD

In Queensland, there is a requirement that Electricians have the consumer protection cover built in to their Sole Trader Liability Insurance, just like it is in Victoria for Plumbers.

As you can see, Sole Trader Insurance sounds more complicated than it actually is. We can help you get the right cover so you can confidently focus on your money making activities.

Read more about this in our Queensland Electrician Insurance guide.

For licensing requirements on trades in QLD, visit the QBCC website.

Sole Trader Insurance NSW

Sole Trader Insurance Requirements NSW are best obtained from FairTrading NSW website.

Whilst the Fair Trading NSW website doesn’t specify the level of public liability insurance cover required, as a startup business you could take up a sole trader liability insurance with a $5 Million limit.

Having said that, the Fair Trading website does list that:

If you are a licensed builder or tradesperson in NSW, you need to get home building compensation (HBC) cover for each home building project over $20,000 including GST.

HBC cover, which used to be called ‘home warranty insurance’, protects homeowners as a last resort if you cannot complete building work or fix defects.

Visit the State Insurance Regulatory Authority’s website for more information.

_{source: https://www.fairtrading.nsw.gov.au/trades-and-businesses/licensing-and-qualifications/general-building-work}