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What Insurance Do I Need As A Sole Trader?

  • Adroit Insurance and Risk
  • May 24, 2022

Sole traders, also known as independent contractors or sole proprietorships who are thus self-employed, have the advantage of the freedom to follow their passion without a boss overseeing everything. But they also have to make sure they are adequately insured.  Sole traders are responsible for their workplace safety and also public safety. 

At Adroit Insurance & Risk, we exist to assist all our clients, including independent contractors, take on tomorrow confidently. With Adroit by your side, you get to focus more on making your business the best it can be. 

With our team handling all your insurance needs, you can stop worrying about the challenges and risks that may hold you back.


The Sole Trader Stats in Australia

Australian Bureau of Statistics (ABS) statistics show that more than 2.3 million businesses were actively trading on June 30, 2019. About 61 per cent were independent contractors or sole traders with no staff. These figures mean a majority of businesses in the country are self-employed. Industries like carpentry and transport saw a significant increase in numbers which means proprietorship is thriving in Australia. It’s hoped they are all insured.

Why You Need a Business Insurance Policy

Independent contractors who are not insured adequately can be left out in the cold with no job or income if they can’t work due to illness, injury or stolen equipment. If you are insured, there’s the need for Public Liability cover in your business insurance policy. Without this insurance, you could be liable for millions of dollars in compensation if your activities injure someone or damage their property. Also, you may need product liability insurance if you sell goods and cyber liability insurance if you run an office.

What Other Insurance Does a Sole Trader Need?

The following are the main insurance covers for sole traders either legally required or recommended:

Income Protection Cover

  • Depending on your policy, this insurance may provide up to 70 per cent of your income if you’ve been injured at work and become temporarily unable to work.
  • Income protection cover can greatly assist sole traders and independent contractors who are not protected by Workers’ Compensation.  
  • If you have to stop work permanently, some income protection policies include Total and Permanent Disability (TPD) cover, and premiums can often be tax-deductible.

Business Insurance (with Public Liability & Professional Indemnity)  

  • Business insurance policies may contain professional indemnity insurance, which is usually compulsory. This cover protects sole traders or anyone whose business gives professional advice.
  • Should you need to defend yourself against negligence claims, Public Liability insurance may cover your legal fees and compensation.
  • Both Public Liability insurance covers and Professional Indemnity insurance are compulsory for some professions such as financial advisors, e.g., and without it, they may be unable to operate fully licenced.

Personal Accident Insurance & Sickness  Cover

  • Personal accident and sickness insurance may be a more cost-effective way to provide income protection IF your income protection insurance protects you only for accidental injury and doesn’t cover you for illness.  
  • Personal accident and sickness cover is beneficial for independent contractors who may not be entitled to workers compensation.
  • Depending on your policy, capital benefits may be paid in some circumstances in the event of permanent disability or death.

Property and Tools Insurance Cover

  • As a tradie, or even a professional financial adviser, transport contractor or any independent contractor, you know how vital your equipment and tools are to you. You may have invested in quite a collection, so it would probably cost a lot to replace. Unfortunately, too many Victorian self-employed workers have suffered theft, loss or damage to their vital tools of trade. Without insurance, they may have gone out of business.  That’s why it is necessary to have tools and equipment or electronic equipment insurance for any of your business assets and for your financial protection.

This information on the many types of sole trader insurance is general advice only. For more detailed suggestions by a trusted insurance broker on various insurance products, contact us today at Adroit to work out all your sole trader insurance needs. 

Our Adroit team is more than a group of insurance risk advisers. We are your risk advisory team, your advocate and your partner, so call us on 03 5221 6644 or email geelong@adroit.com.au.

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