One of the easiest ways to set up a business is to become a sole trader. This business structure offers you complete freedom to make decisions, retain profits, and manage your business operations independently. However, being a sole trader also leaves you exposed to potential losses, especially if you have inadequate insurance coverage. Since sole traders are accountable for all aspects of their business, including financial obligations and legal liabilities, not having proper insurance can result in significant damage to your business, reputation, and personal assets. Hence, obtaining the right insurance is vital to mitigate risks and ensure the continuity of your business. Remember, the consequences of underinsurance or a complete lack of insurance can leave you overexposed.
Sole Trader insurance needs
Sole traders have access to various insurance covers categorised under ‘business insurance’. The key insurances you should consider are Public Liability, Plant & Equipment, Personal Accident, Worker’s Compensation, Professional Indemnity and IT Liability.
Public liability insurance
This insurance protects you in the event a third party sues you for injury or property damage while dealing with you or your products. No matter how careful you are, there’s always the chance an accident could happen to a member of the public or their property. If it does, your Public Liability policy provides a financial payment to assist with the reasonable legal costs of defending a claim against your business, as well as covering compensation costs should you ultimately be found liable for damages or injuries.
Professional indemnity insurance
This insurance is suitable for those offering advice or services and covers legal expenses in the event that a customer accuses them of negligence or financial loss due to following their advice. Professional indemnity can cover IT professionals, bookkeepers and allied health for defamation, intellectual property infringement and breach of duty.
Personal sickness and accident insurance
Provides crucial protection in the event of illness or injury that prevents you from working. This insurance ensures that you can continue to receive a portion of your income during your recovery period, alleviating financial strain. It serves as a safety net, offering peace of mind and financial stability, allowing you to focus on your recovery without worrying about the financial impact of being unable to work.
While being a sole trader business offers several advantages, it is crucial to assess and address the unique risks associated with your industry. Acquiring suitable insurance is paramount to safeguarding both you and your business. If you are a sole trader and want to understand your options, contact the team at LA Insurance today.
LA Insurance Pty Ltd ABN 16 610 540 577. Corporate Authorised Representative of Insurance Advisernet Australia Pty Ltd, Australian Financial Services License 240549. Corporate Representative No. 1255587.
Any information provided herein is of a general nature only. No consideration has been taken into your objectives, needs or financial situation. Before acting on this information you should consider if it is appropriate for your situation.