Ask a builder, a strata manager or a commercial client what they need before you start, and the first thing on the list is usually a certificate of currency for public liability insurance. It's the policy most tradies know about. But it doesn't cover your own injuries, your tools or your employees, and those gaps catch out a lot of sole traders.
This guide explains what public liability insurance covers, when you need it, and the other policies a trade business should consider. It draws on business.gov.au's guide to types of business insurance. It's general information only: the right cover depends on your trade, your contracts and your state, so talk to a licensed insurance broker or insurer before you buy.
What public liability insurance covers
business.gov.au describes public liability insurance as cover for when someone dies, gets injured or has their property damaged because of your negligence. For a tradie, that might be:
- A customer trips over a lead you left across a doorway and breaks a wrist.
- You crack a benchtop, flood a bathroom or damage a neighbour's fence while on the job.
- Sparks from cutting start a fire in a customer's shed.
Depending on the policy, cover can also extend to emotional distress, and to consequential loss, where your negligence causes another business to lose expected revenue.
What it doesn't cover
Public liability is about harm to other people and their property. It generally doesn't cover:
- Your own injuries or illness. That needs accident and sickness or income protection cover.
- Your employees. Workers compensation covers them.
- Your tools and equipment. That needs portable equipment insurance.
- Your vehicle. That needs CTP and motor vehicle insurance.
Policies also differ in what they exclude. Some exclude certain high-risk activities, such as working at heights over a set limit, hot work or particular materials, or the cost of redoing your own faulty work. Read the product disclosure statement and ask your broker about anything specific to your trade.
Is public liability insurance compulsory?
There's no single national rule. business.gov.au says public liability is among the insurances you may need by law, and that some states and territories require it for certain occupations. Check with your licensing body when you apply for or renew a licence.
In practice, the bigger driver is contracts. Builders, head contractors, strata managers, real estate agencies, councils and commercial clients routinely require subcontractors to hold public liability, and often specify a minimum cover amount in the contract. They'll ask to see a certificate of currency before you start, and again each year. Without it you can't take the work.
How much cover do you need?
There's no official figure for this. The amount you need is usually set by the contracts you want to win and the risks of your work. Before you buy, check:
- The minimum cover in the contracts or subcontractor agreements you sign, or plan to.
- What your licensing body requires, if anything.
- The worst realistic accident on one of your jobs.
A broker can compare policies for your trade and explain the excess and any exclusions.
The other insurance a trade business needs
Common insurance for trade businesses
What each type of cover does, and whether the law can require it, according to business.gov.au.
| Cover | What it covers | Required by law? |
|---|---|---|
| Public liability | Death, injury or property damage to someone else caused by your negligence | Some states and territories require it for certain occupations. Many builders and commercial clients require it in their contracts |
| Workers compensation | Your employees, if they're injured or become sick because of work | Yes, if you have employees. Laws vary by state and territory |
| Third party personal injury (CTP) | People injured by your vehicle | Yes, if your business uses vehicles. Often part of your registration fee |
| Accident and sickness, or income protection | Part of your own income if you can't work because of injury or illness | No, but workers compensation doesn't cover you as a sole trader |
| Portable equipment (tools) | Accidental loss, damage or theft of tools and equipment you take to jobs | No |
| Product liability | Injury, death or damage caused by goods you make, sell or supply, including in a repair or service | No |
| Professional indemnity | Claims about your professional advice or services, such as design | Mandatory for some professions |
| Home warranty (home indemnity) | Homeowners, if the builder dies, disappears or becomes insolvent (the cover varies by state) | Yes, for residential building work over each state's threshold |
Workers compensation: compulsory once you employ
business.gov.au is clear: employers must get workers compensation insurance from an authorised insurer. It covers your employees if they're injured or become sick because of work. The rules are set by each state and territory, and so are the insurers and premiums. Safe Work Australia explains that there are separate workers compensation schemes in each state and territory, plus Commonwealth schemes.
business.gov.au lists the regulators: WorkSafe ACT, the State Insurance Regulatory Authority (NSW), NT WorkSafe, WorkCover Queensland, ReturnToWorkSA, WorkSafe Tasmania, WorkSafe Victoria and WorkCover WA.
If you engage contractors, check with your state's workers compensation regulator. In some situations a contractor can be treated like a worker for workers compensation purposes. That isn't the same test as the one Fair Work uses for employment, so check both. Fair Work explains the difference between employees and independent contractors, and the rules on sham contracting.
Cover for yourself: the gap most sole traders miss
This is the one to take seriously. business.gov.au puts it plainly: "If you're a sole trader, workers compensation insurance doesn't cover you." If you can't work because of an injury or illness, on or off the job, the money stops.
The options business.gov.au lists include:
- Accident and sickness insurance, which pays you for loss of income while you recover.
- Income protection, which covers part of your income if you can't work because of sickness or an accident.
- Total and permanent disability, trauma and life insurance, which pay lump sums in specific situations.
Some of these can be held through your super fund. The ATO says premiums for income protection you hold outside super can generally be claimed as a deduction, but not cover held through super. Check the details with your fund and your tax agent.
Tools, equipment and vehicles
Theft from utes, vans and job sites is a common problem for tradies. Portable equipment insurance, as business.gov.au describes it, covers accidental loss, damage or theft of tools and electrical equipment you take on a job. Check whether the policy covers tools left in a locked vehicle overnight, and whether it requires the vehicle to be locked or alarmed.
For vehicles, compulsory third party (CTP) personal injury cover is often part of your registration. Damage to your own vehicle, and to other people's vehicles and property, needs separate motor insurance. Make sure the policy knows the vehicle is used for business.
Product liability and professional indemnity
If you make, sell or supply goods, including parts you supply as part of a repair or service, business.gov.au says you may need product liability insurance. Many tradie liability policies bundle public and product liability together, so check yours.
Professional indemnity covers claims about your advice or professional services, such as design work, specifications or certification. It's mandatory for some professions. If you give design advice or sign off on work, ask your broker whether you need it.
Home warranty insurance for residential work
If you contract directly with homeowners for residential building work above a certain value, most states require home warranty insurance (also called home indemnity or home building compensation cover). It protects the homeowner, not you, but you must arrange it, usually before you start work or take a deposit. Our guide to home warranty insurance by state has the thresholds.
Buying insurance: practical tips
- Use a licensed broker or an authorised insurer. business.gov.au suggests checking an insurer on APRA's register of authorised general insurers, and a broker's licence on ASIC's professional register.
- Describe your work accurately. Tell the insurer your trade, the work you do (including heights, hot work and any asbestos), your turnover and whether you use subcontractors. Getting this wrong can put a claim at risk.
- Read the exclusions and the excess, not just the price.
- Keep your certificate of currency handy on your phone, so you can send it the moment a client asks.
- Review the cover every year, and whenever your work changes: new services, employees, bigger jobs or interstate work.
- Keep good records. Photos of the site before and after, signed safety forms and incident reports help if a claim arises.
If you have a dispute with an insurer about a claim, use their internal complaints process first. If that doesn't resolve it, the Australian Financial Complaints Authority (AFCA) can consider complaints about small business insurance, as well as sickness, accident and income protection policies. AFCA doesn't handle workers compensation complaints.
Good records reduce the risk
Insurance pays out after something goes wrong. Good systems help stop it going wrong, and give you evidence if it does. Tradie Business includes SWMS and safety forms, with job hazard analyses, pre-start checks and incident reports that your crew sign on their phones. There's also a daily job log with photos, and timesheets that show who was on site and when.
See all the features, check the pricing, or see how it works for electricians, roofers and concreters.
Insurance checklist for tradies
- Public liability at the level your contracts and licence require, with a certificate of currency.
- Workers compensation from your state scheme before your first employee starts.
- Accident and sickness or income protection for yourself.
- Portable equipment cover for your tools.
- CTP and motor insurance on business vehicles, noted for business use.
- Product liability, which is often bundled, and professional indemnity if you give design advice.
- Home warranty insurance for residential work over your state's threshold.
- An annual review with your broker.
You also need the right licence for the work. See trade licence requirements by state.
