What's legally required, and what's genuinely worth having
One policy is compulsory. A handful more are genuinely worth having. And a long list of others exist purely to be sold to you.
Working out which category a given policy falls into is most of the battle.
The short answer
In Australia, the only insurance almost every business is legally required to hold is workers' compensation, once you have even one employee — plus compulsory third-party personal injury cover on any registered business vehicle, which is usually bundled into registration. Beyond that, most cover isn't legally compulsory, but several types are genuinely worth budgeting for depending on what your business actually does.
What's legally required
Workers' compensation insurance. Compulsory the moment you employ anyone, arranged through an authorised insurer, with requirements varying by state and territory.
Third party personal injury insurance. Required if your business uses motor vehicles — typically included as part of vehicle registration.
Public liability, in some cases. Not universally compulsory, but required by law for certain occupations in some states and territories, and often required by landlords, clients or industry bodies even where the law itself doesn't demand it.
Getting professional advice on exactly which insurances your specific business is legally required to hold is worth doing early — requirements genuinely vary by industry, state and business activity.
The cover most small businesses should seriously consider
| Type | What it covers | Worth considering if |
|---|---|---|
| Public liability | Injury or property damage to a third party caused by your business | Customers, suppliers or the public visit your premises or you visit theirs |
| Professional indemnity | Financial loss to a client caused by mistakes, negligence or bad advice in your professional services | You provide advice, designs, plans or professional services |
| Product liability | Injury or damage caused by a product you make, sell or supply | You manufacture, sell or repair physical products |
| Business interruption | Lost income and extra costs if an insured event disrupts trading | A fire, flood or similar event stopping trade would genuinely threaten the business |
| Cyber liability | Costs from data breaches, cyberattacks and related business interruption | You hold customer data or process online payments |
| Commercial property | Your premises, fit-out, stock and equipment | You own or lease significant physical assets or stock |
Matching cover to your actual business, not a generic list
Insurance needs genuinely differ by business type — a consultant advising clients has very different exposure to a retailer with a physical shopfront and stock. A useful exercise is asking, for each type of cover, “what specific event would this actually protect me from, and how likely and costly would that event be for my business?” rather than working through a generic checklist.
Budgeting for it properly
Treat insurance as a genuine, recurring operating cost in your budget — not a one-off purchase to revisit only when something goes wrong.
Review your cover annually, or whenever the business changes meaningfully — new premises, new equipment, hiring staff, adding products or services.
Some professional associations offer industry-specific insurance, sometimes at a meaningfully lower cost than a generic policy — worth checking before buying independently.
A broker can help match cover to your actual risk rather than a generic bundle, particularly once your business is complex enough that the right combination isn't obvious.
A quick self-check
Do I have the insurance my business is legally required to hold, confirmed properly rather than assumed?
Have I matched my cover to my actual risks, rather than a generic small-business bundle?
When did I last review my insurance against how the business has actually changed?
Am I budgeting for insurance as an ongoing cost, not an afterthought?
Free official resource
The Australian Government explains the common types of business insurance and how to work out what your business needs.
business.gov.au — Types of business insurance https://business.gov.au/risk-management/insurance/types-of-business-insurance
When should you get professional help?
you're not sure which insurances your business is legally required to hold;
you want your cover matched properly to your specific risks rather than a generic bundle;
your business has changed meaningfully — new premises, staff, products — since you last reviewed your insurance; or
you want your insurance costs factored properly into your overall business budget.
Continue learning
→ How Do I Build a Realistic Business Budget?
→ What Financial Controls Does a Small Business Actually Need?
→ I'm Hiring My First Employee — What Financial Obligations Do I Need to Understand?
SKC Accounting | Knowledge Centre | Knowledge Guide 053
Last reviewed: August 2026
General information only. This guide does not take into account your individual circumstances and is not a substitute for professional accounting, taxation, legal or financial advice.