You have been doing the work for years, nothing has ever gone wrong, and every year you look at the insurance renewal notice and think: do I actually need this?
Then you hear about a sparky who drilled through a water main, or a painter whose industrial fan started a fire, or a concretor whose apprentice put someone in hospital on day three. And the answer becomes very clear, very quickly.
The short answer
Every Australian tradie needs public liability insurance at a minimum - most principal contractors and commercial clients require $5 million cover before you set foot on site. If you own significant tools, tools and equipment cover is worth it. If you employ anyone, workers compensation is a legal requirement, not a choice.
Here is a plain-English breakdown of what the different types of insurance actually cover, what they cost, and what you will be asked to show before a commercial client lets you through the gate.
1. Public liability - the one you cannot operate without
Public liability insurance covers you if your work causes injury to someone or damage to their property. A client trips over your gear. You crack a tile and water gets into the subfloor. A piece of equipment falls and hits a bystander. That is what public liability is there for.
For a sole trader doing domestic work, $2 million cover is technically enough to meet most minimum requirements. But $5 million has become the de facto standard because commercial clients and principal contractors will almost universally require it before they let a subcontractor on site. If you plan to do any commercial or industrial work at any point, get $5 million from the start. It is not significantly more expensive and saves you having to upgrade mid-contract.
Some higher-risk or high-value commercial sites will require $10 million or $20 million cover. This is less common but worth knowing before you price a job - if the contract requires cover you do not have, you either upgrade quickly or walk away.
The Insurance Council of Australia has general guidance on liability cover for small businesses if you want to understand the policy terms before buying.
2. What it costs
Most tradies pay somewhere between $500 and $1,500 per year for $5M public liability cover. The range is wide because premiums depend on your trade, your annual turnover, and the type of work you do. A cabinet maker doing residential fit-outs will pay less than a demolition contractor or a roofer.
A few things that push premiums up: working at height, working with hazardous materials, working on large commercial sites, higher annual turnover. Things that can bring them down: strong claims history, professional memberships, bundling with other cover types.
Do not just renew with your existing insurer every year without checking. Premiums vary significantly across providers for identical cover. A broker who specialises in trades can often find materially better deals than going direct.
3. Tools and equipment cover
If your tools were stolen from the van tonight, how long would it take to replace them and what would it cost? If the answer is "a week and several thousand dollars", tools and equipment cover is worth considering.
This type of policy covers your tools, equipment, and sometimes plant and machinery against theft, loss, and accidental damage. Some policies cover tools in transit, some only cover them on site - read the fine print before you buy.
A few things to know:
- Most policies have a single item limit - typically $1,000 to $2,000. If you have individual tools worth more than that, declare them specifically or they will not be fully covered.
- Leaving tools in a vehicle overnight is a common exclusion. Check whether your policy covers overnight vehicle storage and what security requirements apply.
- Some home and contents policies extend to tools, but only up to a very low limit and usually not for commercial use. Do not assume your home insurance has you covered.
Annual premiums for tools cover generally run $300 to $800 depending on the value of your kit. For a tradie with $10,000 or more in tools and equipment, that is a reasonable cost of doing business.
4. Income protection
This one is the most personal, and the most commonly skipped.
If you are an employee and you get hurt, you have sick leave and potentially workers comp. If you are a self-employed tradie and you break your wrist or throw your back out, you have nothing - unless you have income protection insurance.
Income protection pays a percentage of your income (typically 75%) if you are unable to work due to illness or injury. Policies have a waiting period before payments start - usually 30, 60, or 90 days - and a maximum benefit period that ranges from two years to age 65 depending on what you pay for.
The shorter the waiting period and the longer the benefit period, the higher the premium. For most sole traders, a 30-day waiting period with a two-year benefit period strikes a reasonable balance between coverage and cost.
Premiums vary significantly based on age, trade, income level, and health history. It is genuinely worth speaking to a financial adviser or insurance broker rather than just picking something off a comparison site - the difference in policy quality between cheap and slightly-less-cheap income protection is significant.
5. Workers compensation - non-negotiable the moment you hire anyone
If you employ anyone in Australia - full-time, part-time, apprentice, casual labourer hired for a single job - workers compensation insurance is a legal requirement. Full stop. There is no threshold, no grace period, no exception for short-term arrangements.
Workers comp covers your employees if they are injured or become ill as a result of work. It pays their medical costs, rehabilitation, and a portion of lost wages. If something happens to someone working for you and you do not have workers comp, you are personally liable for those costs - plus the regulatory penalties for not having the cover in the first place.
Workers compensation is managed at the state and territory level, not federally. Each state has its own scheme and authority:
- NSW: icare
- VIC: WorkSafe Victoria
- QLD: WorkCover Queensland
- WA: WorkCover WA
- SA: ReturnToWorkSA
- TAS: WorkSafe Tasmania
- ACT: WorkSafe ACT
- NT: NT WorkSafe
Register with your state authority as soon as you take on your first employee - not after the first payroll, not after the trial period. From day one.
As a sole trader with no employees, you generally cannot get workers comp for yourself under the standard schemes - though some states have options for sole traders to access limited cover. If you are injured while working alone and have no income protection, there is no safety net. That is the gap income protection is designed to fill.
6. What commercial clients will actually ask for
If you are moving into commercial or principal contractor work - or you are already there - here is what you will realistically be asked to provide before setting foot on site:
- Certificate of currency for public liability - confirms your policy is current, shows the insured amount, and names the insurer. Keep a copy on your phone because you will be asked for it.
- Minimum $5M public liability cover - some sites require $10M or $20M. Check the contract before you price the job.
- Workers compensation certificate of currency - if you have employees, this will be required alongside public liability. Two separate documents.
- Sometimes: professional indemnity - mainly if you are providing design, specifications, or formal advice as part of your scope. Less common for pure trade work.
Getting your certificates of currency organised before you need them saves a scramble on the morning of a job. Most insurers can generate one through their online portal within minutes.
7. The gap most tradies leave open
The coverage that gets skipped most often is income protection - and it is the one that causes the most financial damage when something goes wrong.
Public liability and tools cover protect against events that affect other people or your equipment. Income protection protects you. One bad injury - a hand through a circular saw, a back that gives out from years of heavy lifting - can take a sole trader out of work for months. Without income protection, that means no income at all.
It is not the most exciting insurance to think about. But for a self-employed tradie with a mortgage and a family, it is arguably the most important one on the list.
What to lock in before your next job
Public liability at $5 million is the floor, not the ceiling. Tools and equipment cover if your kit is worth replacing. Income protection if you have nobody else paying you when you cannot work. Workers comp the moment anyone works for you - no exceptions, no delays.
Insurance is one of those things that feels like dead money right up until the moment it is not. Get the basics in place, review it when your circumstances change, and keep your certificates of currency somewhere you can find them when a client asks.
Frequently asked questions
How much does public liability insurance cost for a tradie?
Most tradies pay between $500 and $1,500 per year for $5M cover, depending on trade type, annual turnover, and the nature of the work. High-risk trades like roofing or demolition sit at the higher end. It is worth comparing through a broker rather than going direct - premiums vary significantly for the same level of cover.
Do I need workers compensation if I am a sole trader?
If you work alone with no employees, workers comp is generally not required - but you also cannot claim it if you are injured. The moment you hire anyone, even casually for a single job, it becomes a legal requirement in every state. Some contractor arrangements also trigger the requirement depending on your state, so check with your state authority if you are unsure.
Can clients check my insurance before hiring me?
Yes, and they do. Most commercial clients and principal contractors will ask for a certificate of currency before you come on site. It is a document your insurer provides showing your policy is current and confirming the cover amount. Keep one saved on your phone - you will be asked for it more often than you expect.
What is professional indemnity insurance and do tradies need it?
Professional indemnity covers claims arising from professional advice or design work - not the physical trade work itself. Most tradies doing hands-on work do not need it. It becomes relevant if you are providing design-and-construct services or formal specifications as part of your scope. If you are designing something as well as building it, talk to a broker about whether it applies to you.