Business insurance basics: the covers small businesses most often discuss with a broker

A small business insurance conversation can quickly turn into an alphabet of cover types, which makes it easy to lose track of what's actually mandatory versus what's simply commonly discussed. In practice, only a small handful of covers are mandated nationwide — workers' compensation, arranged under each state's own scheme, and compulsory third party (CTP) cover for registered vehicles — with public liability often required contractually, by a landlord, client contract or trade body, rather than by statute itself. Everything beyond that baseline is elective, but a few covers come up in almost every broker conversation because they address specific, foreseeable gaps.

Public liability is usually first on the list. It responds to claims of injury to a third party, or damage to their property, arising from the business's activities — relevant to almost any business with customers, contractors or members of the public on site or at a client's premises.

Professional indemnity is a different kind of protection, responding to claims of financial loss arising from allegedly negligent advice or a professional service, rather than physical injury or property damage. It's a common conversation for consultants, trades that provide specifications or plans, and any service business where a mistake could cost a client money rather than cause a physical incident.

Business interruption cover responds to lost income and ongoing fixed costs following an insured event — a fire, for example — that stops the business trading. This is one of the areas where getting the sum insured and the indemnity period right matters most, since it needs to reflect a realistic estimate of how long it would actually take to get the business back to its pre-loss trading position, not just the cost of physically repairing the premises. Underinsuring this figure is a genuinely easy mistake to make without deliberately working through the calculation.

Cyber insurance is the newer arrival on this list, responding to costs arising from data breaches, ransomware and business email compromise. Industry reporting commonly notes that business interruption costs make up a substantial share of the total cost of a cyber incident, alongside crisis-management, data-restoration and third-party liability costs.

Across all of this, a broker's practical role is assessing which of these exposures are actually relevant to a specific business, then comparing the Product Disclosure Statement and Target Market Determination for each option across insurers, since cover, sub-limits and exclusions can vary meaningfully even between products with very similar names. It's also worth knowing that both the General Insurance Code of Practice and the Insurance Brokers Code of Practice extend certain protections to eligible small business, not only to individual retail consumers.

This article is general information only. It does not take into account your personal circumstances and is not a recommendation to buy, hold, cancel or switch any insurance product. Before engaging an insurance broker or agency, you can check whether the business holds a current Australian Financial Services Licence, or whether an individual is an authorised representative of one, on ASIC's professional registers at asic.gov.au — general insurance is generally not covered by moneysmart.gov.au's Financial Advisers Register, which applies to personal financial advice. If you have an unresolved dispute with an insurer or broker, the Australian Financial Complaints Authority (AFCA) provides a free external dispute resolution service at afca.org.au. Our directory lists insurance brokers, insurance agencies and life insurance specialists across Australia by area if you are ready to start comparing your options.

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