People often think about insurance in terms of life insurance, car insurance and private health insurance. But when you go into business for yourself, you should about whether you need insurance to cover you things that might not go quite as planned while you're operating. While you're working through your small business to-do list, make sure you find the right type of insurance.

Why small businesses should consider insurance

Insurance provides you with financial compensation in the event of an injury or accident that results in any specified losses or damage. You pay an annual premium to an insurer, usually paid fortnightly or monthly, in return for coverage. You never know when you'll need insurance. Let's take a look at a few examples.

Sole trader:

Nancy runs a small interior design business, and has public liability.  She works out of her home office, where she has one employee and meets with clients regularly. One day, after a big storm, a client slipped and fell on a small puddle at Nancy's front door. Fortunately, Nancy had public liability to cover the cost of her client's recovery.


David owns his own business consultancy, and has professional indemnity insurance. One of his clients lost a significant amount of money after David implemented a new strategy. The client took legal action against David, who was unable to cover the legal costs of fighting the claim. However, he had taken out professional indemnity insurance to cover the cost of litigation in case a situation like this arose.


Sarah works with a friend in a boutique pottery store, and has asset protection cover. Every night Sarah and her partner lock up their pottery, but one night a thief breaks in and destroys their products and damages their equipment. Luckily Sarah had remembered to take out asset protection and was able to replace a lot of what had been damaged. Often, when small businesses enter into contracts with other businesses the contract might require them to be covered by certain types of insurance. Don't leave it until the last minute to get your coverage, as delays might impact your business.

What are the different types of insurance?

Workers' compensation: If you have employees, you are required to provide workers' compensation. It will help provide compensation to your employees should in the event of a workplace accident or illness and are unable to resume their usual duties. Public liability: Public liability insurance covers you in the event you and your business are found to be negligent and that negligence results in loss or injury to any person or property or the death of a person. Professional indemnity: Professional indemnity insurance helps cover cost of litigation in the event a professional is in breach of a contract or provides misleading advice or is unable to correctly provide the required service. Asset protection: Asset protection provides insurance in the event of damage to your physical belongings, including vehicles, machinery, equipment and office furniture and stationary, including electricals.

What type of insurance do you need to take out?

Insurance coverage for your small business will depend on a number of factors, including:

Risk associated with your type of business. Services you provide. Number of employees. State or territory you're business is based in. Industry standards. Client requirements. For more information about Workers Compensation Insurance in your state, visit the relevant state or territory website as the rules and requirements will vary depending on your location. Did you know using your business credit card to pay for your insurance premiums is an easy way to earn rewards points? Learn more about how to use a rewards program to your advantage.