You're the business, if you can't work, income stops
Broken bones, serious illness, temporary disability, as a sole trader or founder, your income depends on you showing up. Personal Accident Insurance replaces your income and covers medical costs when injury or illness stops you from working.
What could go wrong
As a sole trader or founder, you are the business. No sick leave, no Workers' Compensation, no safety net. One serious injury or illness, and income stops while your business costs continue. Your mortgage, your family, and your employees' wages all depend on your ability to work. Without Personal Accident Insurance, a broken bone can break your business.
The ladder fall
You're a sole trader consultant. You fall off a ladder at home while cleaning gutters. Fractured hip, surgery required. You're off work for 12 weeks. Medical bills: $18,000* (after Medicare).
Lost income: $30,000* . Your business expenses continue: rent, software, and insurance. You have no income, but bills continue to arrive.
The serious illness
The permanent disability
You suffer an injury that causes permanent partial disability. You lose 30% use of your dominant hand. You can eventually return to work, but not at the same capacity or income level. Your earning capacity is permanently reduced.
What this actually covers
Personal Accident Insurance
Personal Accident Insurance protects sole traders and founders and business owners who can't get Workers’ Compensation:
Weekly income benefits:
- Regular payments if you can't work (typically 75-85% of your proven income)
- Starts after waiting period (7, 14, or 30 days)
- Continues until you return to work or reach maximum benefit period (usually 2 years)
- Partial payments if you return to work at reduced capacity
Medical expenses:
- Hospital and surgical costs
- Specialist appointments
- Physiotherapy and rehabilitation
- Prescription medications
- Medical equipment and aids
- Ambulance and emergency treatment
- Dental treatment from accidents
Lump sum benefits:
- Death benefit paid to your dependents
- Total permanent disability (TPD) payment
- Partial permanent disability (scaled payments based on severity)
- Loss of sight, hearing, or limbs (specific schedules)
What's typically covered:
- Accidents causing injury (fractures, burns, cuts, impact injuries)
- Sudden illness requiring hospitalisation
- Specified illnesses (depends on policy)
- On and off-duty accidents
- 24/7 worldwide cover
When you need this
Pre-launch to first year
You need this from Day 1 if you:
- Are a sole trader (you can't get Workers Compensation for yourself)
- Don't have income protection or sick leave
- Have dependents relying on your income
- Have business loans or mortgages
- Have no financial buffer for months without income
- Do any physical work or manual tasks
Income protection vs Personal Accident:
Income Protection is broader (covers illness and injury). Personal Accident is narrower but more affordable (covering accidents and certain illnesses only). Consider your risk profile and budget.
Growing and hiring
Your cover needs to increase when:
- Your income increases significantly
- You have more financial commitments (loans, mortgages, school fees)
- You're still doing hands-on work (not just managing)
- Your business would struggle without you for months
- You have more dependents
Established and optimising
Consider transitioning to:
- Full Income Protection (broader than Personal Accident)
- Key Person Insurance (protects the business if you're incapacitated)
- Life Insurance for estate planning
- TPD cover for serious disability scenarios
Common questions
Can't I just get Workers’ Compensation for myself as a sole trader?
No. Workers’ Comp only covers employees. Sole traders, partners, and some company directors can't claim Workers’ Comp. Personal Accident Insurance fills this gap.
What's the difference between Personal Accident and Income Protection?
Personal Accident insurance covers accidents and some illnesses (a narrower, more cost-effective option). Income Protection covers any illness or injury that stops you working (broader, more expensive). If the budget allows, Income Protection is better.
How do I prove my income if it varies?
Insurers use your last 2 years of tax returns to determine your average income. If you're an early-stage with low declared income, they may accept projected income with evidence (contracts, business plan).
What if I can work part-time but not full-time?
Most policies pay partial benefits if you return to work at reduced capacity. If you normally earn $2,000/week but can only earn $800/week part-time, you'd receive 75% of the $1,200 difference.
Does this cover mental health issues?
Most Personal Accident policies exclude mental health conditions unless directly caused by a physical injury (e.g., depression following a serious accident). For standalone mental health cover, you need specific income protection.
Can I claim if injured outside of work hours?
Yes. Personal Accident Insurance covers you 24/7, on and off duty, anywhere in the world (check policy for geographical limits).
What else might I need?
Personal Accident covers injury and illness, but not everything:
If you're a company director:
You can choose to opt into Workers' Compensation as a deemed worker in some states—cheaper than Personal Accident for some.
If you want broader income protection:
Consider standalone Income Protection insurance, which covers any illness or injury, not just accidents.
If you have dependents:
Add Life Insurance and TPD cover to protect your family if you die or are permanently disabled.
If you're growing the business:
Consider Key Person Insurance as it protects the business financially if you're unable to work.