Types of business insurance in Australia: what you need

Published Wednesday 22 April 2026

Table of contents

• Insurance required by law
• Types of business insurance
• Industry-specific insurance requirements
• Getting started with small business insurance
• Reviewing your business insurance coverage
• Protecting your business beyond insurance
• FAQs on business insurance

Key takeaways

• Prioritise workers compensation insurance first, as it's the only business insurance required by law in Australia if you have employees, with rules varying by state and territory.
• Match your insurance cover to your specific business risks by choosing from key policy types such as public liability, professional indemnity, property, cyber liability, and business interruption insurance.
• Consider cyber liability insurance if your business collects customer data or processes online payments, as business interruption costs alone make up nearly 80% of cyber insurance claims.
• Review your insurance cover every year or whenever your business changes significantly, such as when you hire staff, add new locations, or expand your products or services.

Insurance required by law

Workers compensation insurance is the only business insurance legally required in Australia. If you have employees, you must have this cover.

Workers compensation pays for lost wages and medical costs when a staff member is injured or becomes ill because of their work. Requirements vary by state and territory, so check with your local regulator.

You still need to maintain a safe workplace by practising strong health and safety measures.

Each Australian state and territory has different requirements.

State and territory variations

Workers compensation requirements differ across Australian states and territories. Each jurisdiction has its own regulator, rules, and insurance providers.

Key state and territory regulators include:

• New South Wales: State Insurance Regulatory Authority (SIRA)
• Victoria: WorkSafe Victoria
• Queensland: WorkCover Queensland
• Western Australia: WorkCover WA
• South Australia: ReturnToWorkSA
• Tasmania: WorkSafe Tasmania
• Northern Territory: NT WorkSafe
• ACT: Access Canberra

Check with your local regulator for specific requirements, including coverage limits and approved insurers in your state.

Types of business insurance

Australian businesses can choose from several types of insurance cover to protect against different risks. The main types:

• protect against liability with public liability, professional indemnity and product liability cover
• protect assets with property insurance and commercial vehicle insurance
• protect income with business continuation insurance
• protect digital operations with cyber liability insurance

Your specific needs depend on how your business operates and the risks you face.

Public liability

Public liability insurance protects your business when you cause harm to members of the public or their property. It covers:

• damage to someone else's property
• injury to a member of the public
• illness caused to the public by your business
• legal costs and court-awarded compensation

This cover applies to the public, not your employees.

Professional liability

Professional indemnity insurance covers financial losses when mistakes in your professional advice or services cause harm to clients. This is also called professional liability insurance.

Regulators often require this cover for businesses that:

• provide legal advice
• deliver medical services
• offer engineering services
• give financial advice

For example, the Australian Securities and Investments Commission (ASIC) requires financial services licensees with revenue of $2 million or less to hold at least $2 million in cover.

Property

Property insurance protects your business buildings and contents from theft, fire, and natural disasters.

Many small businesses keep all their assets in one location. Comprehensive property cover helps protect against total loss and supports business continuity.

Vehicle

Commercial vehicle insurance covers your business vehicles for loss and damage. Depending on your policy, cover can:

• pay for damage from accidents
• cover theft of the vehicle
• compensate for injuries from accidents
• protect against liability claims from other road users

Personal car insurance typically doesn't cover vehicles used for business purposes.

Product liability

Product liability insurance protects businesses that sell or supply products. It covers you when a product causes injury, illness, or damage to a customer or third party.

This insurance pays for legal costs and compensation claims, reducing your financial exposure from product-related incidents.

Business continuation

Business continuation insurance replaces lost income when your business must close or scale back due to events outside your control. This is also called business interruption insurance.

Cover typically applies after events like fire, flood, or major equipment failure. The insurance provides cash flow to help restore operations more quickly.

Cyber liability

Cyber liability insurance covers financial losses from data breaches, cyber attacks, and ransomware incidents. This protection is becoming essential for businesses that store customer information or rely on digital systems.

Cyber insurance typically:

• pays costs to notify affected customers after a data breach
• covers legal fees and regulatory fines
• compensates for business interruption losses during system downtime, which often comprise nearly 80% of every cyber insurance claim
• pays ransom payments and recovery costs
• provides credit monitoring services for affected customers

Any business that collects customer data, processes online payments, or stores sensitive information should consider cyber liability cover, especially since data is stolen in about 86% of all ransomware incidents.

Beyond general business insurance, your industry may have specific requirements.

Industry-specific insurance requirements

Some industries have unique risks that require specialised insurance cover. Common examples:

• construction businesses need contract works insurance and tool of trade cover
• healthcare businesses need medical malpractice insurance
• information technology (IT) and consulting businesses need cyber liability insurance and professional indemnity
• hospitality businesses need liquor liability and food contamination cover
• transport businesses need goods in transit insurance and fleet cover

Research what is standard in your industry to choose the right level of cover. Your industry association or insurance broker can advise on typical requirements.

Getting started with small business insurance

Getting the right insurance balance protects your business without overspending on unnecessary cover. Follow these steps to get started:

1. Assess your risks. Identify what could cause financial loss to your business. Insurance gaps cost small businesses an average of $1.4 million in 2022.
2. Talk to other business owners. Ask what types of insurance work for similar businesses in your industry.
3. Consult your accountant. Get professional guidance on your coverage needs before approaching insurance brokers.
4. Compare policies carefully. Check what each policy includes and excludes before you commit, as 44% of all complaints reported by insurance brokers in 2022 were about small business or farm insurance products.

Reviewing your business insurance coverage

Regular insurance reviews ensure your coverage matches your current business needs. Review your policies annually or when significant changes occur.

Review your insurance when you:

• change your business structure, as moving from sole trader to company may require different cover
• hire or reduce employees, which affects your workers compensation requirements
• add new locations or assets that may need updated cover
• expand your products or services, which may require different liability insurance

Protecting your business beyond insurance

Business continuity planning protects against risks that insurance can't cover. A continuity plan helps you navigate challenges like natural disasters, major client loss, or supply chain disruptions.

The Australian Prudential Regulation Authority (APRA) recommends developing a business continuity management plan to protect your business operations.

FAQs on business insurance

Here are answers to common questions about business insurance in Australia.

What business insurance is required by law in Australia?

Workers compensation insurance is the only legally required business insurance in Australia. You must have this cover if you have employees. Requirements vary by state and territory, so check with your local regulator for specific obligations.

How much does business insurance cost?

Business insurance costs vary depending on your industry, business size, location, and the types of cover you need. Get quotes from multiple insurers and compare the cover provided, not just the price. Your insurance broker or accountant can help you find appropriate coverage at competitive rates.

What's the difference between public liability and professional indemnity insurance?

Public liability insurance covers physical injury or property damage you cause to members of the public. Professional indemnity insurance covers financial losses from errors or negligence in your professional advice or services. Many businesses need both types of cover.

Do I need cyber insurance for my small business?

You should consider cyber insurance if you collect customer data, process online payments, or store sensitive information. Data breaches can be costly, with average losses exceeding $50,000 and business interruption costs comprising nearly 80% of cyber insurance claims.

How often should I review my business insurance?

Review your business insurance annually or whenever significant changes occur, such as hiring employees, expanding to new locations, adding new products or services, or changing your business structure. Regular reviews ensure your coverage matches your current business needs.