Does a Sole Trader Need Insurance?

Key Takeaways

• As a sole trader, you’re personally responsible for your business, meaning risks like property damage, accidents, and legal claims directly affect you. Insurance helps protect your livelihood.
• If you’re unable to work due to injury, insurance like personal accident coverage ensures you can continue to receive support while recovering, protecting your income and business stability.
• Having the right insurance not only protects your business but also boosts your credibility. Clients and contractors are more likely to trust an insured operator.
• Every sole trader’s needs are different. Whether it’s public liability, professional indemnity, or cyber coverage, choosing the right insurance ensures you’re fully protected.
• Insurance is often more affordable than expected, and with flexible payment options with Tradesure, you can secure the coverage you need without straining your cash flow.

Big protection for small businesses

Many assume that business insurance is only necessary for large companies, but for sole traders, it’s just as important, if not more so. When you operate independently, every job, client and asset directly affects your livelihood.

In January 2025 alone, there were 940 new personal insolvency cases across Australia. The top three industries affected were retail, construction and health care—all sectors where sole traders are commonly self-employed. That’s why protecting your business with the right insurance matters. Whether on the tools, giving professional advice or managing finances, having the proper coverage is essential to ensure your business stays afloat and you can continue operating confidently. Without it, a single accident or injury could leave you personally responsible for costly medical bills or legal fees. For sole traders, who don’t have the safety net of a large company behind them, these risks can be devastating, impacting not just your business, but your reputation and future.

Tradesure has been supporting Australian sole traders with tailored insurance solutions for years. From bricklayers to plumbers and everything in between, we’re the trusted team helping sole traders protect their livelihood, stay compliant and keep doing what they do best.

Why sole traders need insurance

Sole traders face a different set of risks every day. Unlike larger businesses with teams and resources to fall back on, sole traders are personally responsible for their operations, which means they carry the full weight of any incident. Whether it’s a public liability claim from accidental property damage or injury to a third party, or a tool theft that disrupts your work, the financial fallout can be severe and long-lasting.

Personal injury is a major risk for sole traders. If you’re injured and unable to work, you won’t receive an income. With no team to rely on during illness, a prolonged absence can not only undermine your financial stability but also harm your reputation.

For those working in trades, the exposure is even greater. High-risk environments increase the chances of accidents and unplanned events that can lead to costly legal or medical bills. A simple mishap on heavy machinery can cause property damage, injury and even long-lasting consequences such as damage to client relationships.

Insurance not only protects your finances, but it also reinforces your professionalism. Clients and contractors are more likely to trust and work with insured operators. But most importantly, it gives you peace of mind. Knowing you’re covered means you can focus on the job, not the ‘what ifs’. With the right cover in place, you’re not just protecting your business—you’re ensuring its continuity, stability and long-term success.

Types of insurance essential for sole traders

Operating as a sole trader means wearing many hats and managing various risks. Having the right insurance in place is key to protecting your business, income and future. Here are the essential types of insurance every sole trader should consider:

Public liability insurance

This is one of the most important covers for sole traders. It protects you if your work causes injury to a third party or damages someone else’s property. Whether you’re on a job site or in a client’s home, accidents can happen. Public liability insurance helps cover legal costs and compensation, providing financial protection.

Professional indemnity insurance

If you offer advice or professional services, this cover is a must. It protects you against claims of negligence, errors or omissions that may cause financial loss to your clients. It’s particularly important for consultants, designers or anyone providing specialist advice.

Tools and equipment insurance

Your tools and equipment are just as necessary for your business as you are, but if something were to happen, could you cover the cost of replacing your equipment straight away? If your tools are stolen or you experience a machinery breakdown, insurance can repair or replace them quickly so you can keep your business moving with minimal downtime.

Personal accident insurance

If you’re injured and unable to work, this cover can provide financial support while you recover. For sole traders without access to paid leave, it’s a necessary safety net so you can continue to receive compensation for the time you are out of work.

Cyber insurance

Even small businesses face the risk of cyberattacks. Cyber insurance helps protect against losses from data breaches, hacking and online fraud. It’s especially important for sole traders operating online, where handling client data means a privacy breach can be both serious and costly.

How to choose the right business insurance policy

Choosing the right insurance as a sole trader starts with understanding the work you do and where things could go wrong. It’s a different process compared to personal insurance, with more factors to consider. Think about your day-to-day tasks—do you deal with the public, use expensive tools, or give advice to clients? Do you rely on your gear or digital systems to keep your business running? These are all areas where things going wrong can cost you money, time or your reputation.

It’s worth thinking ahead to how you’d manage if something were to happen. Would you be able to cover a large repair bill, manage lost income or a legal claim on your own? The answer to that question will help guide the type and level of cover you might need.

While it might be tempting to handle your insurance on your own, speaking with a broker who understands the industry can save you time and hassle. At Tradesure, we make it easier to navigate your insurance options and find cover that suits your business and your budget—without paying for what you don’t need. We’re the trusted team supporting sole traders across Australia with tailored insurance solutions.

If you’re ready to get started, Tradesure offers fast quotes and friendly service for public liability insurance. It’s quick, easy and helps protect your business from day one.

Common misconceptions about sole trader insurance

Sole traders could be forgiven for assuming that investing in comprehensive insurance cover is only necessary for larger companies or high-risk jobs. However, working for yourself carries the full weight of responsibility if something goes wrong. From costly legal claims to damaged property or personal injury, the risks are real, and the impact can be severe without the proper protection in place.

How to protect yourself as a sole trader

Running your own business means staying on top of more than just the job. Simple steps can make a big difference when it comes to protecting yourself. Start by keeping clear and accurate financial records—this will help you at tax time and in the event of an audit. It’s also smart to get professional advice from a legal or financial advisor to ensure you’re meeting your obligations and not missing anything important.

Insurance isn’t something you sort once and forget. As your business evolves and industry regulations change, so do your risks. It’s a good idea to review your policy every six months to make sure you’re still covered from all angles. A quick check-in with a Tradesure insurance broker can help you update your cover and give you peace of mind with a second opinion.

Finally, stay informed. When you’re busy on site, it’s easy to miss changes in your trade or industry. Take a few minutes every few weeks to check for updates—it could save you from big headaches later.

The right cover for sole traders starts with Tradesure

Running your own business comes with freedom, but also a lot of responsibility. When things go wrong, there’s no one else to fall back on. That’s why the right insurance isn’t just something to put on paper—it’s peace of mind that you’re covered when it counts. Whether you’re just starting out or have been on the tools for years, securing a strong insurance policy is necessary for long-term business continuity.

Tradesure is here to help you protect what you’ve built. We’ll walk you through your options, keep things simple and make sure you’re only paying for what you need.