Start smart › Business structure guide
How your business structure affects your insurance.
Sole trader, partnership, company, trust, your structure changes what you need to insure, how much you’re personally exposed, and what your broker needs to know.
Why structure matters for insurance
Personal liability:
How much risk do you carry personally?
Policy ownership:
To whom the policy is issued.
Claims exposure:
What happens if something goes wrong?
Compliance requirements:
What’s legally required vs. optional.
Sole trader
You and the business are the same legal entity.
Insurance implications:
- You’re personally liable for everything: debts, claims, and legal action. There’s no separation between personal and business assets.
- Policies are issued in your personal name.
- Public Liability and Professional Indemnity become critical because you’re fully exposed.
- Your home and personal assets can be claimed against.
What you need:
- Public Liability (essential)
- Professional Indemnity (if providing advice/services)
- Consider personal accident cover (if you can’t work, the business stops)
The risk:
If something goes wrong, such as a major claim, lawsuit, or debt, your personal assets are at risk. Insurance is your main protection.
Partnership
Two or more people operating a business together.
Insurance implications:
- Joint and several liability: Each partner can be held liable for the entire debt or claim, not just their share
- Policies cover all partners, but claims can be made against any individual partner
- High personal exposure, if one partner causes a claim, all partners are liable.
What you need:
- Public Liability (covering all partners)
- Professional Indemnity (covering all partners)
- Partnership agreement should specify insurance responsibilities
- Consider Key Person insurance if one partner is critical to operations.
The risk:
Partnerships carry high personal liability. Insurance is essential, and so is a solid partnership agreement that addresses insurance obligations.
Company (Pty Ltd)
The company is a separate legal entity from you.
Insurance implications:
- Limited liability: The company is liable, not you personally (in most cases)
- Policies are issued in the company name
- Directors can still be personally liable for certain actions (hence Directors & Officers insurance)
- Generally safer structure from a liability perspective.
What you need:
- Public Liability (issued to the company)
- Professional Indemnity (issued to the company)
- Consider Management Liability/D&O as you grow.
The benefit:
Your personal assets are generally protected if the company is sued or incurs debt (barring fraud, personal guarantees, or director misconduct).
Trust
Trustees manage assets on behalf of beneficiaries.
Insurance implications:
- Trustees are personally liable for trust debts and claims
- Policies need to cover both the trust and the trustees
- Complex structure, requires careful policy wording
- Often used for asset protection, but trustees still need personal liability cover.
What you need:
- Public Liability (covering trustees and the trust)
- Professional Indemnity (if applicable)
- Trustees’ liability insurance (specific cover for trustees)
The complexity:
Trusts require specialist advice. Make sure your broker understands trust structures and writes policies accordingly.
Common questions
About structure and insurance
I'm a sole trader now, but plan to become a company later. What should I do?
Get sole trader cover now, then notify us when you incorporate. We’ll reissue the policy in the company name. Don’t delay covering just because you’re planning to change the structure.
If I'm a company director, am I personally protected?
Do I need to tell my insurer if I change business structure?
Can I have insurance in my personal name but trade through a company?
I'm not sure what to do next... how do I make sure the insurance matches?
What happens next
Once you’re launched and making sales, your needs will change. As you grow, you’ll add team members, increase revenue, and take on bigger risks. That’s when you move from Start Smart to Scale Strong.