Insurance for Australian Trade Businesses
Some cover you're required to hold, some your licence depends on, some your clients demand and some just stops a bad month ending the business. Here's what each policy actually does and how to work out which ones you need.
Insurance is the bill you resent right up until the week you need it. The problem for most trade businesses isn't being uninsured — it's being insured for the wrong things: a public liability policy doing work it was never designed to do, tools cover with a sub-limit nobody read, and nothing at all for the six weeks the business can't trade. This guide walks through the covers an Australian trade business deals with, what each one is actually for, and how to work out your own exposure instead of copying someone else's policy list.
Doing this job for a living? See job management in ServiceYak.
Start with what you're required to hold
Three categories of obligation, and they're different things:
- Required by law. Workers compensation is required in every state and territory once you have workers, and it's run by the state — a state scheme in some places, licensed private insurers in others. The definition of "worker" is broader than employee and can capture contractors, so don't assume subbies are outside it. Compulsory third party motor cover is required for every registered vehicle.
- Required by your licence. Many trade licence and contractor registration classes make holding public liability, and sometimes professional indemnity, a condition of the licence. Electrical and plumbing contractor registrations commonly do. Read your own licence conditions rather than assuming.
- Required by your clients. Head contractors, developers, councils and government clients will specify the covers and the minimum sums insured before you set foot on site, and will want a certificate of currency. This is often the strictest of the three.
Requirements and thresholds differ by state and by licence class, and they get revised. Confirm what applies to you with your state's workers compensation authority and with the regulator that issued your licence — then have a broker check the policy actually satisfies it.
What each policy actually does
The names sound similar and the covers are not interchangeable. What separates them is who suffers the loss and how:
| Cover | What it responds to |
|---|---|
| Public liability | Injury to other people, or damage to their property, caused by your work |
| Products liability | Injury or damage caused by products you supplied or installed, after you've left |
| Professional indemnity | Financial loss caused by your advice, design, specification or certification |
| Workers compensation | Injury or illness to your workers — medical costs, wages, rehabilitation |
| Tools and equipment | Your tools lost, stolen or damaged, including from the vehicle |
| Contract works | Damage to the job in progress — fire, storm, theft, vandalism, before handover |
| Commercial motor | The ute and the trailer, beyond compulsory third party |
| Business interruption | Income lost and costs still owed while the business can't trade |
| Personal accident and income protection | Your own income when you're the one who can't work |
| Management liability | Claims against you as a director — employment practices, statutory liability |
The two most commonly confused are public liability and professional indemnity, and the difference is worth being precise about. Public liability deals with physical harm — someone trips over your gear, a dropped tool cracks a benchtop. Professional indemnity deals with pure financial loss, where nobody was hurt and nothing was broken: you specified the wrong unit, sized something incorrectly, gave advice that cost the client money. A public liability policy generally excludes claims arising from professional advice, which is exactly when people discover they needed the other one.
When a tradie needs professional indemnity
Plenty of tradies assume PI is for architects and engineers. It follows the work you do, not your job title, and trade businesses drift into advice territory constantly:
- A sparky laying out a switchboard or specifying a supply upgrade rather than installing to someone else's design.
- An HVAC business sizing and selecting a system for a building.
- A plumber specifying a hot water solution or a drainage layout, or certifying work.
- A builder or trade taking on any part of the design under a design-and-construct contract.
- Anyone emailing a client to say "use this product instead" and having that recommendation relied on.
Three questions settle it. Do you design, specify, advise or certify? Does your licence class or registration require PI? Does a contract you want to sign require it? A yes to any of them means you need cover, and the third one is increasingly common on commercial and government work.
Regulation here is moving. Several states are tightening the accountability of building and design practitioners, with insurance conditions attached to registration for particular classes, and commencement dates for some of it have shifted more than once. Rather than relying on a date you read somewhere, ask your regulator what applies to your licence class now and ask your broker what's coming.
PI is usually written on a claims-made basis, meaning the policy that responds is the one in force when the claim is made — not when the work was done. That's why run-off cover matters if you stop trading, and why letting a PI policy lapse can expose years of past work.
The cover most tradies skip
Business interruption doesn't pay to fix the damage — your property policy does that. It pays for the income you lose and the costs that keep running while you can't trade. Shed burns down, the plant you depend on is destroyed, the site is closed by an authority: the repair gets funded, and the eight weeks of no revenue doesn't unless you've bought this.
- Business income — the profit you would have earned, plus the fixed costs still going out.
- Increased cost of working — the extra you spend to keep trading: temporary premises, hired plant, overtime.
- Contingent interruption — losses caused by a supplier or a key customer being knocked out rather than you.
- Denial of access — where you can't reach your premises because of something nearby.
The number to get right is the indemnity period — how long the policy keeps paying. Businesses routinely pick the shortest option and discover that rebuilding, re-equipping and rebuilding a customer base takes longer than that. Exclusions matter here too: flood, earthquake and communicable disease are commonly carved out or covered separately. Read the schedule, not the brochure.
Working out your own exposure
Rather than starting from a list of policies, start from what would actually hurt. Work through these and you'll end up with a policy list that fits your business:
- What's the worst thing your work could do to someone else?. Injury, property damage, or a financial loss from a decision you made. That tells you whether you need liability cover, professional indemnity, or both, and roughly how much.
- What would it cost to replace everything in the ute tomorrow?. Add it up properly. Tools policies have sub-limits per item and conditions about vehicles left unattended, and both are where claims get reduced.
- How long could the business survive with no income?. That number sets whether you need business interruption and what indemnity period to buy. For most small trade businesses the honest answer is weeks, not months.
- What happens if you personally can't work for six months?. If the business stops when you stop, income protection and personal accident cover aren't optional extras.
- What do your contracts require?. Go through the head contract terms you sign. Required covers, minimum sums insured, and who has to be named as an interested party.
- What's your subbies' exposure?. Collect certificates of currency from every subcontractor before they start, and diarise the expiry. Their uninsured mistake becomes your claim.
Buying it, and keeping it honest
- Use a broker who does trades. They know which insurers actually pay claims in your trade and what the standard exclusions do to you.
- Compare the wording, not just the premium. Two public liability policies at the same price can have completely different exclusions for hot work, working at height, or work on existing structures.
- Check the exclusions that match your work. Hot works, height, excavation and work on existing property are the usual traps.
- Declare what you actually do. Cover bought for domestic maintenance won't respond to a commercial fit-out. Non-disclosure is the fastest route to a declined claim.
- Review annually and after every change. New trade, first employee, first commercial job, new plant, working interstate — each one changes your exposure.
- Keep your certificates of currency somewhere you can find them, because a client will ask on a Friday afternoon.
Premiums vary enormously by trade, turnover, claims history and the covers you select, so treat any figure you're quoted by another tradie as meaningless for your business. Get your own quotes.
Most claims are won or lost on records. ServiceYak keeps the whole job on one card — the signed quote, the variations, the site photos, the notes — so if an insurer or a client questions what was agreed and what was done, the evidence is on the job rather than in a phone's camera roll.
Frequently asked questions
What insurance is legally required for a tradie in Australia?
Workers compensation once you have workers, in every state and territory, plus compulsory third party cover on your vehicles. Beyond that, requirements come from your licence conditions rather than from general law — many contractor registrations require public liability, and some classes require professional indemnity. Check with your state's workers compensation authority and the regulator that issued your licence.
Do I need workers compensation for subcontractors?
Possibly. The definition of a worker for workers compensation purposes is broader than employee, and in several jurisdictions genuine-looking subcontractors are deemed workers depending on how the arrangement operates. This is decided by the state scheme, not by what your contract says, so ask your state authority about your specific arrangement rather than assuming.
What's the difference between public liability and professional indemnity?
Public liability responds to physical harm — someone injured or property damaged by your work. Professional indemnity responds to financial loss caused by your advice, design, specification or certification, where nobody was hurt and nothing was broken. Public liability policies generally exclude claims arising from professional advice, so one doesn't back up the other.
How much does tradie insurance cost?
There's no useful average. Premiums depend on your trade, turnover, the work you actually do, your claims history, the sums insured and the excesses you accept, and two businesses in the same trade can be priced very differently. Get quotes for your own business through a broker who works with trades, and compare the wording alongside the price.