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Guide

Do I need business insurance?

Some business insurance is compulsory, some is required by the people you work with, and the rest depends on your risks. Here’s how to tell which is which.

What’s compulsory in every state
Licence and warranty rules, with sources

Updated 3 November 20264 min readGeneral advice only

The short answer

Some insurance is compulsory for most businesses, and the rest depends on your contracts, licence and risks. Business Queensland lists workers compensation, product and public liabilities, third party personal injury insurance for vehicles and industry-specific insurance as compulsory insurance types. In practice, workers compensation once you employ and CTP with vehicle registration apply almost everywhere.

When insurance is compulsory

When insurance is compulsory
Situation	What’s required
You employ workers	Workers compensation in every state and territory. NSW and Victoria use a $7,500 wages threshold, and any apprentice means you need a policy.
You register a vehicle	CTP, which covers injuries to people caused by the vehicle.
Your licence requires it	For example $5 million public liability for Victorian and Queensland electrical contractors and Victorian plumbers.
Your profession requires PI	Registered health practitioners, registered tax and BAS agents, and financial services licensees with retail clients.
You do residential building work	State warranty insurance above a threshold: NSW, Victoria, WA and SA $20,000; Queensland $3,300; ACT $12,000; NT $25,000.

Is it illegal to run a business without insurance?

Not in general. But it’s against the law to employ workers without workers compensation, to register a vehicle without CTP, or to work under some licences without the insurance they require. Energy Safe Victoria, for example, says contracting electrical work without the required insurance is a criminal offence.

When it isn’t compulsory, but you’ll still be asked

Leases, head contractors, commercial clients and event organisers commonly require public liability with a set limit, and councils make it a permit condition. The City of Melbourne, for example, asks for $20 million for footpath trading.

As a sole trader, business.gov.au notes you have unlimited liability, so a claim against the business is a claim against your personal assets, whether insurance is required or not.

How many businesses this applies to

The question applies to more businesses every year. The Australian Bureau of Statistics counted 2,814,778 actively trading businesses at 30 June 2026, up 3.1% in a year, and 460,461 businesses entered during 2025-26. About two thirds (1,818,575) have no employees, and 848,300 are sole proprietors.

Australian businesses at 30 June 2026
Measure	Figure	Source
Actively trading businesses	2,814,778 (up 3.1% in 2025-26)	ABS
Businesses with no employees	1,818,575	ABS
Sole proprietors	848,300	ABS
Businesses that entered in 2025-26	460,461, of which 316,178 were new	ABS
Small businesses (under 20 staff) holding no insurance at all	12.8%, and 24% of sole traders	Insurance Council of Australia survey, 2015

The Insurance Council’s survey is the last published measure of how many small businesses go without cover, and it is more than a decade old. In March 2026 the Australian Small Business and Family Enterprise Ombudsman told a parliamentary inquiry that many small businesses are underinsured or, where cover is available but unaffordable, are going without it altogether.

How to work out what you need

Tell us what you doYour occupation tells us whether you can compare online or a broker is the better fit.

Pick your coversChoose your limit, and add other covers in the same request.

Get your quotes by emailA licensed broker compares our insurer panel. Read the PDS and TMD before you choose.

Do I need business insurance? Questions

Do ABN holders need business insurance?

Having an ABN doesn’t require insurance on its own. What you need depends on whether you employ people, drive for work, hold a licence and what your contracts ask for.

Is public liability compulsory?

Not for every business, but some licences and council permits require it, and leases and contracts commonly do.

Do sole traders need workers compensation?

Not for themselves. You need it once you employ workers, including apprentices.

Do home-based businesses need insurance?

Your home and contents policy may limit or exclude business activity. Check the PDS, and consider business cover if clients visit or you keep stock or equipment at home.

What insurance do I need to start a business?

Start with what’s compulsory for you, then what your contracts and lease require, then the risks that would hurt most. For most, that’s public liability, plus professional indemnity if you give advice.

Compare the covers

Public liability Professional indemnity Business insurance pack Small business insurance All guides Starting a business in Australia Insurance with an ABN What is an insurance broker?

More guides

$20m public liability cost Certificate of currency Business interruption Directors and officers General liability in Australia Is business insurance compulsory?Contractor vs subcontractor Sole trader vs company

Sources

Reviewed 5 October 2026. General information only, not personal advice. Read the PDS and TMD before you buy.

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Getting started

Compulsory or not, know where you stand.

What does your business do?

What cover do you need?

Almost there.

A few quick checks.

Where should we send your quotes?

A licensed broker is the right fit.

Done.