What Do Different Types of Business Insurance Cover?

Scaling up or ​​starting your own venture can be an exhilarating milestone – just ask the people behind the 437,150 new Australian businesses that entered the market in the 2024-25 financial year.¹

But amid wrangling business plans, marketing strategies and cashflow forecasts, trying to figure out what type of business insurance you might need to help cover all your hard work can be confusing.

For example, are some types of insurance mandatory? What do different business insurance policies cover? How can you work out what your business actually needs? And what are the risks involved with not having the right types of business insurance in place?

If questions like these sound familiar, you’re not alone. The Australian Chamber of Commerce and Industry recently recognised that more needs to be done to improve insurance literacy among small business ​​owners.²

To help clear things up, we’ve put together this guide to explain the different types of business insurance and answer a few common queries.

What insurance does a business need?

It depends on a range of factors, such as whether or not you employ staff, if certain types of business insurance are mandatory in your industry, and the specific risks your business might face.³

A good place to start may be working out whether any types of business insurance are legally required – before moving on to considering optional types of insurance and deciding whether they may be suitable for your business.³

Bear in mind too that if a claim is made against your business, or a customer or staff member gets injured, the costs you might incur could result in your business having to close if you don’t have the adequate level of insurance in place – mandatory or otherwise.⁴

What types of business insurance are mandatory?

Compulsory insurance can depend on the type of business you’re running. For example, if your business employs staff, you’re legally required to have workers compensation insurance.³ And if you have business vehicles, Compulsory Third Party (CTP) insurance is also mandatory.³

​​Public liability insurance is also a legal requirement for some occupations in some states and territories, ​while professional indemnity insurance is compulsory for some professions regardless of where you live.³

What do common types of business insurance cover?

To help you understand how different business insurance types work – and who might want or need to consider them – here’s a straightforward breakdown of some common covers.

Workers compensation insurance

This is a form of insurance payment to employees if they are injured or become sick due to their work. It can cover their medical expenses as well as their wages while they’re unable to work.⁵

If you employ staff, you’ll need to get workers compensation insurance from the workers compensation regulator in your state or territory:³

• ACT: WorkSafe ACT
• NSW: State Insurance Regulatory Authority
• NT: NT WorkSafe
• Qld: WorkCover Queensland
• SA: ReturnToWorkSA
• Tas: WorkSafe Tasmania
• Vic: WorkSafe Victoria
• WA: WorkCover WA³

Business vehicle insurance

CTP insurance covers injuries to people caused by car accidents and is a mandatory requirement before you can register any vehicle in Australia.⁶

You might also wish to consider additional car insurance that covers damage to your work vehicles – and to other people’s cars or property if you’re involved in an accident that’s your fault.⁶

Public liability insurance

Public liability insurance covers you if a member of the public injures themselves, or their property gets damaged, and you or your business is found to be negligent.⁷ For example, a customer on a factory tour gets injured by a piece of machinery’s sharp edges.⁴

Public liability insurance is:

• Useful for any business that interacts with people face to face – even if you’re a ​​sole trader – including if customers or members of the general public visit your business or if you visit customers’ premises⁷
• A mandatory part of licensing requirements for certain trades and professions ​​in some states and ​​territories⁸
• Often required if you want to sign a commercial lease agreement or secure certain types of council permits.^9-11

Professional indemnity insurance

This helps cover professionals in many industries against civil liability claims and inquiries from third parties – including claims of negligence – relating to their advice or services.^3,7 For example, a tax agent made an error in providing tax advice, which caused their client to lose money or incur penalties, leading to a professional negligence claim.⁴

Professional indemnity insurance is mandatory for a wide range of professions in Australia, including, but not limited to:

• Certified practising accountants¹²
• Tax agents¹³
• Real estate agents¹⁴
• Lawyers¹⁵
• Architects.¹⁶

Doctors, allied health professionals and midwives, meanwhile, require a specific type of cover, called medical and midwife professional indemnity insurance.¹⁷

Product liability insurance

This covers a business against claims for injury or damage as a result of a defect in any of its products.³ For example, a customer suffers an electrical shock after buying a faulty toaster from an appliance store.⁴

You might like to consider product liability insurance if your business:

• Makes, sells or supplies goods³
• Repairs or services products.⁷

What other types of business insurance are available?

Several other types of small business insurance are available in Australia and they’re all designed to provide cover for different events and risks. Aside from the insurance types already outlined, some of the cover you might need to consider includes:

Business interruption insurance

Business interruption insurance covers your operating costs if an unexpected event – for example a fire, flood, burglary – interrupts your business.^3,7

Contents and equipment insurance

This cover could help you replace items that your business relies on to keep running, such as computer systems, tools or machines, if they’re damaged by events such as storms or fire.^3,7

Burglary insurance

This type of insurance covers losses, damages and associated costs from a break-in or theft at your business.³

Portable equipment insurance

This can cover your business for accidental loss, damage or theft of any tools or electrical equipment that you take on a job with you.³

Deterioration of stock insurance

If you run some type of​ hospitality business and a fridge or freezer stops working, this insurance covers your business for the loss of the stock you might have in cold storage.³

What does Youi’s Small Business Insurance cover?

Youi’s Small Business Insurance automatically includes public liability insurance and ​products liability insurance as standard.¹⁸ Business owners can choose from three levels of business liability cover – $5million, $10million and $20million.¹⁸

Business operators can also choose from seven optional covers – some of which we’ve already outlined above – to add to a Small Business Insurance policy at Youi, for an additional cost. These include:

• Professional indemnity – With this optional cover, you’re covered for civil liability claims that arise from the professional advice or specialist services you provide to clients.¹⁹
• Business interruption – If an unexpected event temporarily disrupts your operations, this helps cover your lost profit and extra operating costs.¹⁹
• Business property damage – Under this optional cover, contents and/or stock in trade at your business premises are covered for loss or damage caused by an accident, for example by fire, storm, flood or theft. Stock in trade is also covered while it’s in transit to or from your business, and refrigerated food or stock is covered for deterioration.^20,21
• Business items – This covers loss or damage to your portable business items, including electronic devices and tools of trade anywhere in the world.²²
• Money – Your business cash is covered for loss or damage with this add-on.²³
• Glass – There’s also the option to add cover for loss or damage to the glass you’re responsible for at your business premises, which may include glass windows if you’re leasing.²⁴
• Tax audit – This option provides cover for the reasonable professional fees and charges you face if your business is audited.¹⁹

Whether you’re gearing up for your business’s launch day or simply taking the time to review your current policies, knowing exactly what the different types of business insurance do and don’t cover might help you feel more prepared to make some important decisions about your risk management.

If you’d like to chat through your options or learn more about Youi’s Small Business Insurance, why not consider giving our team a call on 1300 010 648 or starting a quote online.

¹Source: Australian Bureau of Statistics – 7 facts about Australian businesses, August 2025
²Source: Australian Chamber of Commerce and Industry – Addressing the Small Business Insurance Challenge, October 2025
³Source: Australian Government – Types of business insurance, n.d.
⁴Source: Qld Government Business Queensland – Business insurance, September 2024
⁵Source: Australian Government Fair Work Ombudsman – Workers compensation, n.d.
⁶Source: Moneysmart – Choosing car insurance, n.d.
⁷Source: Business Victoria – Find the right insurance, October 2022
⁸Source: Insurance Council of Australia – Public Liability Submission ICA, March 2026
⁹Source: APNL Accountants & Advisors – 5 Clauses Tenants Should Look For When Reviewing a Lease, n.d.
¹⁰Source: Brisbane City Council – Footpath and outdoor dining permits, n.d.
¹¹Source: City of Sydney – Outdoor dining guidelines, July 2025
¹²Source: CPA Australia – Professional indemnity insurance, n.d.
¹³Source: Australian Government Tax Practitioners Board – Professional indemnity insurance, April 2026
¹⁴Source: Australian College of Professionals – Professional Indemnity Insurance, n.d.
¹⁵Source: LawyersWeekly – Top-up time: Don’t get caught short with your professional indemnity insurance, May 2025
¹⁶Source: Australian Institute of Architects – Professional indemnity insurance basics, October 2025
¹⁷Source: Australian Government Department of Health, Disability and Ageing – About medical and midwife professional indemnity insurance, March 2024
¹⁸Exclusions, limits and additional fees may apply. For full details, see the Small Business Insurance PDS.
¹⁹An additional cost applies for optional covers. Conditions, limits and exclusions apply. For full details, see the PDS & Policy Wording.
²⁰Business Property Damage cover is optional and an additional cost applies. Conditions, limits and exclusions apply. For full details, see the PDS & Policy Wording.
²¹Loss or damage caused by flood, storm or bushfire within the first 72 hours of your policy commencing is only covered in limited circumstances. For full details, see the PDS & Policy Wording.
²²Business Items cover is optional and an additional cost applies. Conditions, limits and exclusions apply. The most we will pay for each item is $2,500, up to a total of the Business Items amount noted on your policy schedule per claim, unless a High Value Business Items amount is noted on your policy schedule, in which case the most we will pay for all items with a replacement value of more than $2,500 is the High Value Business Items amount shown on your policy schedule.
²³Money cover is optional and an additional cost applies. Conditions, limits and exclusions apply. The most we will pay for each claim is the insured value for your business’s money. For full details, see the PDS & Policy Wording.
²⁴Glass cover is optional and an additional cost applies. Conditions, limits and exclusions apply. For full details, see the PDS & Policy Wording.