Being a sole trader has its advantages — you keep what you earn, you choose your hours, and nobody tells you how to do your job. But it also has a hard edge that nobody talks about enough: when something goes wrong, there’s nobody else to wear it. The company doesn’t pay. The boss doesn’t cover you. The insurer doesn’t step in unless you’ve bought the right policy. You’re it.

This guide is for the one-man-band tradie — the sparky with an ABN and a ute, the chippy working solo on home renos, the plumber doing his own thing. It covers what insurance you actually need, what you can skip, what minimum viable cover looks like, and what it costs in 2026.

Why sole traders face a different risk picture

If you’re an employee tradie working for a building company, you’ve got a safety net you probably don’t think about. Workers comp covers you if you’re injured. The company’s PL covers you if your work causes damage. Your tools might be company-supplied. You get sick leave and annual leave.

As a sole trader, none of this exists. You have:

  • No workers comp for yourself (workers comp covers employees, and you’re not your own employee)
  • No sick leave — if you can’t work, your income stops on day one
  • No employer-provided tools cover — your tools are your problem
  • No employer’s PL umbrella — if your work causes damage, you’re personally liable
  • No superannuation guarantee on your own labour

The insurance stack for a sole trader isn’t optional extras. It replaces the safety net that employees get by default.

The minimum viable cover for a sole trader

If you’re a sole trader tradie and you can only afford one policy, make it public liability. If you can afford two, add income protection or personal accident. If you can afford three, add tools cover.

Here’s the logic:

Tier 1 — Public liability ($5M-$10M): $550-$2,200/yr depending on trade. This keeps you legal (licence condition in most states), keeps you hireable (builders and commercial clients won’t touch you without it), and protects you from the one claim that could bankrupt you. This is non-negotiable.

Tier 2 — Income protection or personal accident: $360-$960/yr for a $1,000/week benefit with a 30-day waiting period. If you break your leg and can’t work for three months, this pays the mortgage. Sole traders have zero sick leave. Income protection is how you create your own.

Tier 3 — Tools and equipment cover: $350-$600/yr for $10K-$25K of cover. If your tools get stolen from the ute or the site, this puts you back to work. Without it, you’re buying replacements out of your own pocket before you can earn again.

That’s a minimum viable stack of roughly $1,260-$3,760/yr, depending on your trade. For a sole trader turning over $100K-$150K, that’s 1-3% of revenue. It’s cheap compared to what it protects against.

What you can probably skip (for now)

Professional indemnity — unless you’re doing design work, providing formal advice, or certifying compliance, PI is probably not urgent. The exception is NSW from July 2026: if you’re a registered building or design practitioner, PI becomes mandatory. Electricians doing design and specification work should also watch this space. For most other sole trader tradies, PI can wait until your business grows into providing professional services.

Business interruption — covers your fixed costs if you can’t trade due to an insured event (fire at your workshop, flood at your yard). If you’re a mobile tradie working from a ute with no premises, you don’t have premises costs to cover. Skip it.

Commercial motor — your ute is probably insured under a personal motor policy. Check whether your personal policy covers business use. If it doesn’t, you might need a commercial motor policy, but it’s separate from your trade insurance stack.

ABN, contractor vs employee, and why it matters

One of the most misunderstood insurance issues for sole traders is the ABN distinction.

If you work under an ABN as a contractor, you’re a business, not an employee. That means:

  • The person who engaged you doesn’t pay workers comp for you
  • You don’t get super from them (unless you’re deemed an employee for super purposes, which is a separate ATO test)
  • You’re responsible for your own PL insurance
  • You’re responsible for your own income protection

Some sole traders fall into a grey area where they work primarily for one builder and are treated like employees but paid on ABN. This is sometimes called “sham contracting” and the ATO and Fair Work take a dim view of it. From an insurance perspective, even if your working arrangement looks like employment, if you’re paid on ABN, you need your own insurance. The builder’s PL won’t cover you as an individual — it covers the builder for your actions, and they’ll pursue you to recover any payout.

Sole trader vs company structure

Some sole traders incorporate — set up a Pty Ltd, become a director, and operate through the company. Does this change your insurance?

Partly. A company structure provides some asset protection — if a claim exceeds your insurance limits, the company’s assets are at risk, not your personal house (assuming you haven’t given personal guarantees). But you still need the same insurance — PL, income protection (now called key person or director’s income protection), and tools cover. The premiums don’t change much because insurers rate the risk based on the trade activity, not the legal structure.

The one change: if you’re a company employee (which you are, as a director), you might be covered by your company’s workers comp policy. This gets complicated — talk to your broker or workers comp insurer about whether a working director is covered under the company’s workers comp. In some states, directors can opt in; in others, they’re excluded.

BizPack for sole traders

For sole traders, a BizPack — bundling PL, tools, and personal accident into one policy — is often the simplest and cheapest option. Here’s what the numbers look like for a typical sole trader painter:

Standalone: $750 (PL $5M) + $400 (tools $10K) + $420 (PA&I) = $1,570/yr BizPack equivalent: $1,200-$1,350/yr Saving: $220-$370/yr

For a sole trader electrician with higher PL costs: Standalone: $1,400 (PL $5M) + $500 (tools $15K) + $500 (PA&I) = $2,400/yr BizPack equivalent: $1,800-$2,050/yr Saving: $350-$600/yr

The trade-off is flexibility. If you want to switch your PL to a different insurer at renewal but keep your tools cover where it is, you can’t if they’re bundled. But for most sole traders, the cost saving and administrative simplicity of a single policy outweigh the flexibility loss.

You can compare sole trader insurance quotes through BizCover — compare quotes now.

For the full picture on the policies every tradie needs, check our public liability guide and income protection guide.

Frequently asked questions

Do I need workers comp as a sole trader?

Not for yourself. Workers compensation covers employees, and you’re not your own employee. If you employ anyone — even a casual labourer for a day — you need workers comp. But for yourself, you need income protection or personal accident insurance instead. See our income protection guide for the comparison.

I only work weekends and evenings. Do I still need the same insurance?

Yes. Part-time vs full-time doesn’t change the insurance requirement. If you’re doing trade work, you need PL. The risk per hour on site is the same whether you do 10 hours a week or 50. Your premium might be slightly lower because your turnover is lower, but the need for the cover doesn’t change.

Can my PL cover my tools if I’m only carrying a couple of thousand dollars worth?

No. PL doesn’t cover your own property — it covers third-party property damage. Tools cover is a separate policy or an optional extra on a BizPack. Even if your tools are only worth $2,000, you need a separate policy to cover them. Whether $2,000 of tools is worth insuring is a personal calculation — the premium might be $200-$300/yr, which might or might not make sense for you.

I’m a sole trader plumber but I sometimes bring a mate to help on big jobs. Does that affect my insurance?

Yes. If your mate is paid — even in cash — they’re arguably an employee and you need workers comp. If they work under their own ABN and carry their own PL, they’re a subcontractor and you need to declare subcontractor usage to your PL insurer. Either way, it’s not the same as working solo and your insurer needs to know. Undisclosed helpers are one of the most common reasons PL claims get denied.

Can I claim my insurance premiums on tax?

Yes. All trade insurance premiums — PL, tools cover, income protection (if paid personally), PI — are tax-deductible business expenses. Income protection premiums paid through super are handled differently — talk to your accountant.

The information in this guide is general in nature and does not take into account your individual circumstances. Sole trader insurance needs vary by trade, turnover, and personal financial situation. Read the Product Disclosure Statement (PDS) before purchasing any insurance product.