Guide
What changes the moment you hire someone
Hiring your first employee is a milestone and a legal trigger. Several insurance requirements kick in immediately, and some existing policies need updating.
The big one:
Workers’ Compensation becomes legally mandatory from Day 1 of employment.
The others:
Your exposure to employment-related claims increases significantly.
Insurance is boring until you need it. Then it's everything.
Most founders make the same mistakes: underinsuring, buying the wrong type of insurance, waiting too long, or not reading their policy until it’s too late, during a claim. This guide helps you avoid those mistakes before they cost you your business.
What's now legally required
Workers Compensation Insurance (Mandatory)
- Required:
The moment you hire your first employee - Covers:
Employee injuries at work, medical costs, lost wages, rehabilitation - Penalties for not having it:
Up to $220,000 fines (NSW), plus personal liability for all injury costs - Cost:
1.5-5% of total wages paid annually
Action needed:
- Contact your broker before your employee starts
- Provide employee details, wages, and duties
- Get the policy in place before the first day of work
- Never delay this… It’s the law
A good idea to add (not legally required but essential)
Employment Practices Liability Insurance
What it covers:
- Wrongful termination claims
- Discrimination allegations
- Workplace harassment claims
- Unfair dismissal disputes
What needs updating
Public & Products Liability
Why this is wrong:
Many client contracts, leases, and industry requirements demand minimum coverage (often $10M or $20M). If you only have $5M, you can’t take the work. Worse, if a major incident happens and damages exceed your cover limit, you’re personally liable for everything above that limit.
What to do instead:
Check what your industry, clients, and landlord actually require. Don’t guess—ask for their insurance requirements before you buy. For most businesses, $10M Public Liability and $1-2M Professional Indemnity is standard. Going cheaper might save $200/year but cost you $100k+ contracts.
What needs updating
Professional Indemnity
What changes:
Employee work needs to be covered under your policy
Why:
If your employee makes a professional mistake while working for you, clients will sue you (the business), not the employee.
What needs updating
Cyber Protection
What changes:
Employee access to systems increases your cyber risk
Why:
Employees can accidentally click phishing links, mishandle data, or make security mistakes.
Your hiring timeline with insurance
Research
- Research Workers' Compensation requirements in your state
- Get quotes from your broker
- Budget for additional insurance costs
Organise cover
- Purchase Workers Compensation
- Update Public Liability and Professional Indemnity
- Receive policy documents and Certificate of Currency
Confirm cover
- Confirm all policies cover employees from Day 1
- Set up payroll deductions for Workers' Comp (some states)
- Store all policy documents accessible
Brief them during onboarding
- All insurance is active and covering them
- Certificate of Currency on file
- Clear on what to do if they're injured
Common questions
From business owners at this stage
Can I wait until after they start to get Workers Comp?
No. Legally, you must have it in place before they start work. If they’re injured on Day 1 and you’re not covered, you’re personally liable for all costs plus massive fines.