What Insurance Do I Actually Need as a Small Business in Australia?
Starting or running a small business in Australia comes with enough moving parts — clients, cash flow, compliance, staffing, growth. Insurance is often one of the most confusing pieces of the puzzle, and it’s common for business owners to ask:
“What insurance do I actually need — and what’s just optional?”
The answer depends on your industry, how you operate, and where your risks sit. Some covers are legally required, others are contractually expected, and many are simply smart protections that can save your business if something goes wrong.
This guide breaks down required vs recommended business insurance in Australia, explains which types of insurance apply to different businesses, and shows how your insurance should evolve as your business grows.
Is Business Insurance Mandatory in Australia?
There is no single insurance policy that every Australian business must have, but there are certain covers that become mandatory depending on your situation.
Insurance That May Be Required by Law
You may be legally required to hold insurance if you:
Employ staff
Operate vehicles for business use
Work in licensed or regulated industries
Failing to meet these obligations can result in fines, cancelled contracts, or serious financial exposure.
Insurance Every Small Business Should Consider
Even if insurance isn’t legally required, most small businesses face similar core risks. These are the covers that form the foundation of a solid insurance setup.
1. Public Liability Insurance
Best for: Almost every business that interacts with customers, suppliers, or the public.
Public Liability Insurance protects your business if someone suffers injury or property damage because of your business activities.
Common examples:
A customer slips in your shop
You damage a client’s property while working on-site
Equipment causes injury at a market or event
For many businesses, public liability is essential — and often required under leases, council permits, or client contracts.
👉 Learn more: Public Liability Insurance
2. Professional Indemnity Insurance
Best for: Businesses that provide advice, designs, recommendations, or professional services.
Professional Indemnity Insurance covers claims arising from:
Errors or omissions
Incorrect advice
Breaches of professional duty
This cover is commonly required for consultants, designers, accountants, engineers, IT professionals, and service-based businesses.
Even small mistakes can result in costly claims — especially where financial loss is involved.
👉 Learn more: Professional Indemnity Insurance
3. Business Insurance Package
Best for: Businesses with physical assets, premises, or ongoing operations.
A Business Insurance Package combines multiple covers into one tailored policy, which may include:
Property and contents
Theft and burglary
Business interruption
Money and glass cover
General liability
This is often the most cost-effective way to protect the day-to-day operations of a small business.
👉 Learn more: Business Package Insurance
4. Workers’ Compensation Insurance
Legally required if: You employ staff (including apprentices and some contractors).
Workers’ compensation insurance covers employees for work-related injury or illness. Each state and territory has its own scheme, and penalties apply for non-compliance.
Even one employee triggers this requirement.
5. Cyber Insurance
Best for: Any business that uses email, stores data, processes payments, or relies on technology.
Cyber Insurance is one of the fastest-growing insurance needs for Australian businesses — particularly small businesses.
It can cover:
Data breaches
Ransomware attacks
Phishing and cyber crime
Business interruption from system outages
Legal and notification costs
Small businesses are often targeted because they have fewer security measures but still hold valuable data.
👉 Learn more: Cyber Insurance for Australian Businesses
Required vs Recommended Insurance: What’s the Difference?
| Required | Recommended |
|---|---|
| Workers’ Compensation (if employing staff) | Public Liability |
| Compulsory Third Party (for vehicles) | Professional Indemnity |
| Industry-specific licensing requirements | Business Insurance Package |
| Contractually required cover | Cyber Insurance |
Many businesses discover they “need” insurance only when:
A client requests proof
A contract requires higher limits
Something goes wrong
Planning ahead is always cheaper than reacting after the fact.
Industry-Based Insurance Examples
Tradies & Contractors
Commercial motor
Contract works
Personal accident (if self-employed)
Consultants & Professionals
Business contents (if office-based)
Retail & Hospitality
Online & Home-Based Businesses
As Your Business Grows, Your Insurance Should Too
Insurance isn’t a “set and forget” purchase.
As your business evolves, so do your risks:
New contracts
Higher turnover
Additional staff
New locations
More reliance on technology
What worked when you started may leave gaps as you grow.
This is where working with a business insurance broker becomes valuable — ensuring your cover keeps pace with your business, not just your budget.
How a Business Insurance Broker Can Help
A broker doesn’t just arrange insurance — they help:
Identify gaps in cover
Compare policies across insurers
Align cover with contracts and compliance
Adjust insurance as your business changes
Support you if a claim occurs
For small businesses, having an advocate can make a significant difference when it matters most.
There’s no single checklist that applies to every business — but there is a smarter way to approach insurance.
Understanding what’s required, what’s recommended, and what makes sense for your business puts you in control.
If you’re unsure whether your current insurance is right — or you’re starting from scratch — a review can help clarify your risks and options.
👉 You may also find this helpful:
Business Insurance Costs: What to Expect and How to Save
Need Help Navigating Business Insurance?
If you’d like to understand how different types of business insurance work together — and which ones make sense for your business — speaking with a broker can be a helpful first step.