What business insurance do I actually need? A guide for Australian business owners

This guide is general in nature and does not take into account your objectives, financial situation or needs. It is not personal advice. For cover specific to your business, talk to the Pocket team.

What business insurance does a small business actually need in Australia?

The honest answer: it depends on what your business does, who it does it for, and what could go wrong. There's no universal list that applies to every business owner. What there is, and what this guide gives you, is a clear framework for figuring out your specific exposure, matched to the covers that address it.

This isn't a product catalogue. It's a decision guide.

TL;DR

Most Australian small businesses need more than one type of insurance, but not all of them. Two covers are foundational for a huge range of businesses: Professional Indemnity, if you give advice, and Public Liability, if the public is ever physically near your work. This guide starts there before working through the more specific covers. The right starting point is your risk profile, not a generic checklist. Use the sections below to identify which risks apply to you, then follow the links to explore the relevant cover in depth.

Key facts:

• Small businesses make up around 97% of all Australian businesses, roughly 2.6 million of them (ABS Counts of Australian Business / ASBFEO, 2024-25).
• The average self-reported cost of cybercrime for a small Australian business is $56,600 (ASD Annual Cyber Threat Report 2024-25).
• The ATO actively audits and reviews businesses each year, and responding to an audit is costly regardless of the outcome. The risk isn't that you've done something wrong. It's the cost of dealing with the process.
• Legal disputes like employment claims, contract issues, and property matters are a common and expensive risk for businesses, and the cost of defending one often runs well before any resolution.
• Many business insurance gaps are only discovered at claim time, once it's too late to fix them.

How to use this guide

For each type of cover below, we've answered three questions:

• Who is it for? The specific business types and situations it's designed to address.
• What does it cover? In plain English, not policy language.
• Do you need it? A quick decision prompt so you can move on if it isn't relevant.

If a cover applies to you, follow the link. For our direct products, that's a page with full details and an instant quote. For broker-arranged covers like Professional Indemnity and Public Liability, it's a quick conversation to get the right cover and limit for your situation.

1. Professional Indemnity (the advice cover)

Who is it for?

Any business that gives advice, provides expertise, or delivers a professional service a client relies on. Think consultants, accountants, engineers, IT professionals, designers, financial and mortgage advisers, and architects. If a client could suffer a financial loss because of your work or advice, this is usually the cover you most need.

It's also mandatory for a number of licensed and registered professions, and frequently required by client contracts before you can sign.

What does it cover?

PI responds when a client claims your professional advice, service, or work was negligent, inadequate, or caused them a financial loss:

• Legal defence costs, often the largest expense, and payable even where you ultimately win
• Settlements and judgments you're liable for, up to your policy limit
• Claims of negligence, errors, or omissions in your professional service
• Misrepresentation and breach of professional duty (in many wordings)

The key point most people miss: you don't have to have done anything wrong to face a claim. A client only has to believe your work cost them money. Defending that is expensive regardless of outcome, which is exactly what PI is for.

Do you need it?

Yes, if: your clients act on your advice, recommendations, designs, or professional judgement, and could lose money if you got it wrong. If your contracts require it (many do), or your profession mandates it, the decision is already made. The question becomes how much, not whether.

Worth thinking carefully about, if: you're a sole trader or freelancer who assumes the risk is small because your fees are small. It isn't. The claim is measured by the client's loss, not your fee, so a modest engagement can carry an outsized exposure. Check your client contracts for a specified limit before you decide.

Probably not, if: you sell a physical product with no advice component (Products Liability is your concern instead), or you're an employee covered by your employer's policy. Even then, confirm the employer cover actually extends to you.

→ Talk to a Pocket broker about Professional Indemnity

2. Public Liability (the injury and damage cover)

Who is it for?

Any business whose people, premises, or work could cause physical injury to someone or damage to their property. That's a huge range: retailers and hospitality venues (a customer slips), tradies and contractors (damage on a client site), allied health and clinics (a client injured on the premises), event businesses, and anyone with customers, suppliers, or the public physically present around their work.

What does it cover?

Third-party injury and property damage connected to your business, plus the legal costs of defending those claims. In practice:

• A customer or visitor injured at your premises or by your operations
• Property you damage while working on or at a client's site
• Legal defence costs for a covered claim, whether or not you're found liable

Public Liability is one of the most commonly required types of cover. Landlords, clients, councils, event venues, and licensing bodies routinely demand evidence of it (often $10M-$20M) before they'll deal with you.

Do you need it?

Yes, if: members of the public, clients, or suppliers are ever physically present around your business, or you work at other people's premises. If a contract, lease, or licence requires it, which is common, it's effectively non-negotiable.

Worth thinking carefully about, if: you run a low-footfall or online business and assume you're not exposed. Consider whether you ever meet clients in person, attend sites, exhibit at events, or have anyone visit. The exposure often exists in places people forget to look.

Probably not, if: you're a purely digital business with no physical premises, no client visits, no on-site work, and no events. (Though note: if your risk is that your advice or work product causes financial loss, that's Professional Indemnity, not Public Liability. Different cover, different risk.)

→ Talk to a Pocket broker about Public Liability

Products Liability (often bundled as "Broadform Liability")

Public Liability covers injury or damage connected to your business while you're doing the work. Products Liability covers what happens next, once something you've manufactured, supplied, installed, or altered leaves your hands.

Who is it for? Anyone who manufactures, imports, supplies, installs, or alters a physical product: tradies fitting fixtures or appliances, manufacturers and wholesalers, importers, and businesses that customise or modify products for clients. If a job ends with something physical left behind that could later fail, this is the exposure that outlasts the job.

What does it cover? Third-party injury or property damage caused by a product after it's left your control, including once it's installed, fitted, or altered:

• Injury to a person, or damage to someone else's property, caused by a product you supplied, made, or installed
• Legal defence costs for a covered claim, whether or not you're found liable

It's worth being clear on what it doesn't cover: the cost of fixing, replacing, or making good the faulty product or work itself is generally excluded. That's treated as a workmanship or contractual issue, not a liability claim. What Products Liability responds to is the damage the fault causes to someone or something else, not the fault itself.

Do you need it? Many standard Public Liability policies already include Products Liability as standard, so the question is less "do I need a separate policy" and more "is it actually included, and is the sublimit enough." If you manufacture, supply, install, or alter physical products as part of your work, don't assume it's covered. Check your policy schedule rather than your PL certificate alone.

→ Talk to a Pocket broker about Products Liability

3. Commercial Property & Business Assets

Who is it for?

Any business with physical things worth protecting: a building you own, fit-out and contents, stock, tools, plant, or equipment. Retailers, hospitality venues, manufacturers, warehouses, clinics, workshops, offices. If a fire, storm, theft, or accidental damage would leave you out of pocket to repair or replace, this is the cover.

What does it cover?

Physical loss or damage to your business property, often bundled as a business pack:

• Buildings you own (and sometimes fit-out you've paid for in a leased space)
• Contents, stock, plant, and equipment
• Loss from fire, storm, water damage, vandalism, and accidental damage
• Often extendable to cover glass, money, electronic equipment, and goods in transit

Do you need it?

Yes, if: you own or lease premises, hold stock, or rely on equipment you couldn't easily afford to replace all at once. If you own the building, it's close to essential.

Worth thinking carefully about, if: you lease and assume "the landlord insures the building, so I'm covered." The landlord insures their building, not your fit-out, contents, or stock. That gap is one of the most common under-insurance traps for tenants.

Probably not, if: you're a purely digital or service business with no premises, no stock, and no equipment beyond a laptop you could replace cheaply.

→ Talk to a Pocket broker about Commercial Property

4. Business Interruption

Who is it for?

Any business that would lose income if it couldn't operate for a period of time because of a fire, flood, major equipment failure, or damage that forces you to close or scale back. Most relevant for businesses with premises, stock, or physical operations, but also for any business heavily dependent on a specific location or piece of equipment.

What does it cover?

Business Interruption is triggered by the same insured event as your Property Damage cover. It responds when covered physical damage stops you trading normally, and it picks up the financial side of that same event:

• Lost revenue or profit while you're unable to trade normally
• The cost of getting back up and running quickly, including operating from temporary premises
• The fixed costs that keep running even while trade has stopped, built into how your loss is calculated

Because it's tied to the same trigger as your property cover, the two are really one exposure seen from two angles: the cost of the physical damage, and the income lost while it's being fixed. That's also why the specific events that trigger a claim (fire, storm damage, and so on) are set by your Property Damage section, not by Business Interruption itself. Whatever's insured there is what Business Interruption responds to as well.

Do you need it?

Yes, if: a forced closure of a few weeks or months would threaten the survival of your business, you have fixed costs that don't stop, or revenue tied to a specific premises or operation.

Worth thinking carefully about, if: you've insured your building and stock but not your income. Many businesses rebuild after a fire only to fail during the months of lost trading. Property cover replaces the assets, but only Business Interruption replaces the cash flow. The two go together.

Probably not, if: you could relocate or keep trading almost immediately after a disruption with little income impact (for example, a location-independent service business).

→ Talk to a Pocket broker about Business Interruption

5. Workers' Compensation

Who is it for?

Every business that employs staff. In Australia, Workers' Compensation is legally mandatory the moment you have employees. It's not optional, and the requirements are set by the scheme in your state or territory.

What does it cover?

Support for employees who are injured or become ill because of their work:

• Medical and rehabilitation costs
• Wage replacement while they're unable to work
• Lump-sum compensation for serious permanent injury
• Your liability as an employer for work-related injury

Because it's a statutory scheme, the structure varies by state (icare in NSW, WorkSafe in Victoria, WorkCover in QLD, and so on) but the obligation to have it is national.

Do you need it?

Yes, if: you employ anyone, full-time, part-time, or casual. This isn't a "consider it" cover. It's a legal requirement, and operating without it carries serious penalties.

Worth thinking carefully about, if: you use contractors or subcontractors. The line between "contractor" and "deemed worker" isn't always where you'd assume. In some cases you can be liable to cover people you consider contractors. Worth checking rather than assuming.

Probably not, if: you're a sole trader or partnership with no employees (though you may then want personal income protection instead, since Workers' Comp won't cover you).

→ Talk to a Pocket broker about Workers' Compensation

6. Cyber Protection Insurance

Who is it for?

Any business that stores customer data, accepts online payments, uses cloud software, or relies on digital systems to operate. That's most businesses in 2026, including ones that don't think of themselves as "tech companies." If you use Xero, Google Workspace, Shopify, or simply send emails to customers, you have cyber exposure.

What does it cover?

Cyber insurance covers the costs that hit you when a digital incident occurs, not just the IT bill, but the full financial impact:

Coverage area	What it means in practice
Ransomware / cyber extortion	Ransom payments, negotiation costs, IT forensics
Data breach response	Legal advice, customer notification, credit monitoring
Business interruption	Lost income while your systems are down
System restoration	Costs to repair or rebuild compromised systems
Cyber theft / fraud	Fraudulent fund transfers or digital asset theft
Regulatory defence	Privacy Act investigations, regulatory defence costs, and penalties where insurable by law
Third-party liability	Claims from clients whose data was compromised

Coverage limits range from $250,000 to over $5 million, depending on your business size and risk profile.

Do you need it?

Yes, if: you store any customer data, process payments online, or your business would stop operating if your systems went down for a week.

Worth thinking carefully about, if: you assume you're "too small to be a target." Most attacks aren't targeted. They're automated and hit whoever's exposed, and smaller businesses are often more vulnerable because they have fewer defences. The question isn't whether you're a target. It's whether you could absorb the cost of an incident.

Probably not, if: you're a cash-only, offline sole trader with no digital customer records and no cloud systems. (These businesses are increasingly rare.)

→ Get an instant Cyber Protection Insurance quote

7. Trades Liability & Tools

A note on how this is packaged: some insurers offer Liability and Tools of Trade as a single combined policy; others sell them as separate covers. Which structure applies to you depends on the insurer. This section describes the combined version, but the underlying covers are essentially the same.

Who is it for?

Tradies, contractors, and anyone who works on client sites and could cause damage or injury in the course of doing so. Builders, painters, plumbers, electricians, tilers, landscapers, HVAC technicians, locksmiths, and maintenance contractors, among others.

If you work on someone else's property and something goes wrong, even weeks after you've finished, you need this cover.

What does it cover?

This is a combined policy covering both your liability exposure and your tools:

Coverage area	What it means in practice
Public liability	Claims for injury or property damage caused while on-site
Tool of trade cover	Cover for loss of or damage to tools and equipment, including theft
Products liability	Claims arising from materials or products you supply
Completed works	Third-party injury or property damage from a defect in your completed work, discovered after the job's done. Not the cost of fixing the defect itself
Legal defence costs	Your lawyers are paid even if you're not found liable

Important gap to know about: Trades Liability doesn't cover contract works in progress (you need Contract Works Insurance for that) or employee injuries (covered by Workers' Compensation). If you're unsure whether you have both gaps covered, talk to a Pocket broker.

Do you need it?

Yes, if: you work on client sites and could damage property or injure someone in the course of your work.

Worth thinking carefully about, if: you mostly work from a workshop or your own premises but occasionally attend client sites, have clients visit you, or supply materials. The occasional on-site job still carries the exposure, and the "completed works" risk, a defect discovered after you've left, catches tradies who think they're covered once the job's done.

Probably not, if: you're entirely office-based with no on-site work, no clients visit your office, and no physical products.

→ Explore Trades Liability & Tools Insurance

8. Tax Audit Insurance

Who is it for?

Any business, sole trader, company director, or SMSF trustee who lodges tax returns through a registered tax agent. This isn't niche cover. The ATO audits and reviews a significant number of businesses each year, and small businesses aren't exempt from scrutiny.

The risk isn't that you've done something wrong. It's that responding to an audit is expensive regardless of the outcome.

What does it cover?

Tax Audit Insurance covers your professional fees, accountant and legal costs, when the ATO (or state revenue office) selects you for review. It does not cover any tax you might owe. It covers the cost of dealing with the process.

Extensions are available to cover director personal returns and SMSF audits under the same policy.

Do you need it?

Yes, if: you lodge business tax returns through an accountant and would struggle to absorb unexpected professional fees if you were selected for an audit or review.

Worth thinking carefully about, if: your business has complex financials, contractor arrangements, significant asset purchases, cash-heavy operations, or multiple revenue streams. These don't mean you've done anything wrong, but they're the patterns that tend to attract closer scrutiny, and the fees to respond fall on you either way. Weigh the annual premium against what a few weeks of your accountant's time would cost unplanned.

Probably not, if: your affairs are very simple, you have no accountant fees at stake, and you could comfortably absorb the cost of responding to a review yourself.

→ Get an instant Tax Audit Insurance quote

9. Vacant Land Liability Insurance

Who is it for?

Property owners who hold undeveloped or temporarily vacant land: investors, developers awaiting approval, estate executors, farmers, or anyone between tenants on a commercial site.

The risk here surprises most people: you can be liable for injuries that occur on your land even if you didn't invite anyone onto it, weren't present, and weren't doing anything with it.

What does it cover?

Simple public liability protection for you as the landowner:

• Injury claims from people who access the land (including trespassers)
• Property damage to neighbouring land or structures arising from the condition of your land, for example a collapsing fence, or an unstable tree
• Legal defence costs for claims arising from the land's condition

Do you need it?

Yes, if: you own undeveloped or temporarily vacant land that isn't already covered under a building or landlord policy.

Worth thinking carefully about, if: you assume "nothing's there, so there's nothing to insure." The emptiness is the risk. An unmanaged block near housing or a footpath is exactly where a foreseeable injury, and a liability claim, can arise, even from someone you never invited on. The cost of cover is small against the cost of defending a single injury claim.

Check first: if you have an existing property or landlord insurance policy, confirm whether it extends to vacant land. Many don't.

→ Get an instant Vacant Land Liability quote

10. Allied Health Professional Package (Professional Indemnity & Liability)

A note on how this is packaged: allied health cover is generally arranged as a combined Professional Indemnity and Public & Products Liability policy. A lot of insurers in this space write both under one wording rather than as two separate purchases, though structures do vary. This section covers both parts together, since for most allied health practitioners, one without the other leaves a real gap.

Who is it for?

Allied health practitioners providing clinical services: physiotherapists, occupational therapists, speech pathologists, dietitians, exercise physiologists, podiatrists, massage therapists, naturopaths, chiropractors, osteopaths, and similar professions.

What does it cover?

This package responds to two different kinds of claim, which is exactly why the two covers are usually sold together.

Professional Indemnity, for claims arising from your professional judgement, advice, or treatment decisions:

• Misdiagnosis, or a treatment plan a client says was negligent or inappropriate
• Errors or omissions in your clinical assessment or advice
• Breach of professional duty, including record-keeping and consent issues (in many wordings)

Public & Products Liability, for claims of physical injury or property damage connected to your practice rather than your clinical judgement:

• A client or visitor injured at your premises, for example a slip in your consulting room
• An allergic reaction or injury caused by a product you supplied
• Legal defence costs for a covered claim, whether or not you're found liable

The line between the two isn't always where you'd expect. A treatment-related injury can sometimes sit with Professional Indemnity even though the harm itself is physical, since it arises from a clinical decision rather than the premises or a product. Worth checking with your insurer rather than assuming which side of the line a given scenario falls on.

Do you need it?

Yes, if: you provide hands-on clinical services and clients are physically present in your practice, which covers most allied health professions.

Worth thinking carefully about, if: you're only carrying one half of this cover. Public Liability without Professional Indemnity leaves you exposed the moment a claim is about your clinical judgement rather than your premises, and vice versa. If you're not sure which you currently hold, it's worth checking rather than assuming.

Also consider: whether your professional registration body or employer requires specific cover levels. Many do, and some set minimums for both PI and PL separately.

→ Talk to a Pocket broker about Allied Health cover

11. Commercial Legal Fees Insurance

Who is it for?

Any business that employs people, signs contracts, holds a statutory licence, or owns or leases commercial property. In practice, that covers the vast majority of operating businesses.

Legal disputes don't just happen to businesses that do something wrong. They happen to businesses that are in the wrong place at the wrong time: a difficult employee, a supplier who doesn't deliver, a landlord who disputes your lease terms.

What does it cover?

Dispute type	Coverage
Employment disputes	Unfair dismissal, discrimination, workplace bullying claims
Contract disputes	Pursuit or defence of contractual claims
Property issues	Lease disputes, neighbour disputes, property damage claims
Statutory licence defence	Defending threats to your business licence
Criminal prosecution defence	Defence costs for prosecutions relating to your business
Debt recovery	Legal costs to recover money owed to your business

A key feature: this policy covers both pursuing claims (you're owed money, you need to enforce a contract) and defending them (someone is coming after you). Most insurance only covers defence.

Do you need it?

Yes, if: you have employees, sign commercial contracts, or lease business premises. The legal risk surface for most SMEs is larger than business owners realise until something goes wrong.

Worth thinking carefully about, if: you've never had a legal dispute and assume you won't. Most legal exposure isn't about doing something wrong. It's about being on the receiving end of someone else's dispute, whether that's a difficult employee, a supplier who under-delivers, or a landlord who disputes the lease. The cover pays to pursue as well as defend, which most policies don't.

Particularly valuable for: businesses in high-friction categories like hospitality, retail, and professional services, where employment and contract disputes come up often, since past patterns are a good indicator of future exposure.

→ Talk to a Pocket broker about Commercial Legal Fees

12. Management Liability & Directors' & Officers' (D&O)

Who is it for?

Any business run through a company structure, especially considering the people who run it (directors and officers) can be held personally liable for decisions they make on the company's behalf. Relevant to established companies, growing businesses taking on investors or a board, and any director who wants their personal assets protected from business-related claims.

What does it cover?

Management Liability is usually a bundle; D&O is the core piece:

• D&O: the personal liability of directors and officers for their management decisions, such as claims from shareholders, investors, regulators, or others
• Employment practices liability (claims by employees for wrongful dismissal, discrimination, harassment)
• Statutory liability (defence of certain regulatory investigations and penalties)
• Crime/fidelity (employee theft or fraud against the business)

The key point: unlike most business cover, this protects individuals (the directors) as well as the company. A claim can come after a director's personal assets, and D&O is what stands in front of them.

Do you need it?

Yes, if: you operate through a company and have directors whose personal assets could be exposed by a management decision, a disgruntled employee, or a regulatory issue. If you're raising capital, it's often required by investors before a round closes, commonly the first insurance a term sheet demands.

Worth thinking carefully about, if: you're a small company director who assumes "we're too small for anyone to come after me personally." Employment claims and regulatory matters hit small companies too, and the personal exposure of a director doesn't scale with company size. The protection matters most for those least able to absorb a personal claim.

Probably not, if: you're a sole trader or partnership with no company structure. This specific product is built around directors and officers, so it's not a fit as described. That said, some insurers offer a purpose-built Management Liability product for sole traders covering things like employment issues, employee theft, and WHS incidents, so if you employ staff, it's worth asking your broker whether that's relevant to you.

→ Talk to a Pocket broker about Management Liability & D&O

What if none of these fit perfectly, or you think you need more?

The products above are the most common risks for small and medium businesses.

But not every business fits neatly into a product. If you:

• Have a complex risk profile or operate across multiple industries
• Need specialised or industry-specific covers not detailed here (product liability, marine/transit, commercial motor & fleet, association or scheme cover)
• Want someone to review your full insurance position rather than purchase policies piecemeal
• Are scaling quickly and need cover that keeps pace

then talking to a Pocket broker is the right next step. We review your full business risk, not just one policy, and recommend a tailored package based on your stage and situation.

Talk to a Pocket broker →

Call: 1300 475 092 | Email: hello@withpocket.com.au | Mon-Fri, 9am-5pm AEST

Which cover is right for my business? Quick reference

Business type	Likely relevant covers
Tradie / contractor	Trades Liability & Tools, Tax Audit, Commercial Legal Fees
Allied health practitioner	Allied Health PI/PL, Tax Audit, plus PI via broker
E-commerce / online business	Cyber Protection, Tax Audit, Commercial Legal Fees, Products Liability
Professional services (consultants, agencies)	Cyber Protection, Tax Audit, Commercial Legal Fees, plus PI via broker
Vacant land owner (property development or investment)	Vacant Land Liability, Tax Audit, Commercial Legal Fees
Hospitality / retail	Commercial Legal Fees, Cyber Protection, Tax Audit, Public/Products Liability, Commercial Property
Any employer	Commercial Legal Fees, Cyber Protection, Tax Audit, Workers' Compensation
Tech / software business	ICT/IT Liability, Cyber Protection, plus D&O via broker when raising

This table is indicative only. Your specific risk profile may differ. For personalised advice, speak to a broker.

Get the right cover for your business

Every business has a different risk profile, and the right program is built from your specific exposure, not a generic checklist. Pocket works with Australian business owners at every stage to identify what actually applies to them and arrange it, whether that's an instant online quote or a broker conversation.

Book a free call with the team →

With Pocket is a business name of Insurance Services Holdings Pty Ltd (ABN 36 612 629 295, AFSL 491165). Member of NIBA. Part of the Steadfast Group. This guide is general in nature and does not constitute financial or legal advice. Before acting on any information here, consider whether it's appropriate for your circumstances and read the relevant Product Disclosure Statement.