Sole traders and proprietors are not eligible to get workers compensation insurance. But, there are other insurance options that can protect traders from revenue loss because of work-related injuries or illnesses. One solution for this is to invest in income protection insurance. This policy can cover your potential income loss in case you get sick or injured.
In today’s blog post, you will learn more about workers compensation and other insurance options for sole traders and proprietors. Why is it important? What are the benefits? Let’s find out!
Sole Traders in Australia: Growing in Numbers
According to the Australian Bureau of Statistics, there were over 2.5 million actively trading businesses in the Australian economy. As the number of sole traders and contractors continues to rise, it is imperative for both employers and employees to familiarise themselves with their rights and responsibilities regarding workers compensation.
What is Workers Compensation Insurance & What Does it Cover?
Workers compensation insurance is designed to protect employees financially in case they get hurt or sick at work. Depending on the policy, workers compensation usually covers the following:
- Wages while employees are unfit to work
- Medical expenses
- Rehabilitation services
For more comprehensive policies, it may also cover:
- Permanent impairment
- Funeral expenses
- Periodic payments for dependents
- Lump sum compensation to support dependents in case of death
Why Do You Need Workers Compensation Insurance in Australia?
Australian law mandates all employers to have insurance to provide a financial safety net to employees in case they are unable to work because of work-related injuries or illnesses. But, as business professionals, you should see this as an investment, rather than just policy compliance.
Here are the reasons workers compensation insurance:
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It Boosts Morale and Promote Positive Work Environment.
Getting workers compensation shows how much you value your employees and their future. As a result, it boosts their morale and promotes a positive work environment. This also improves your relationship with your workers.
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It Improves Workplace Safety
Workers compensation requires all employers to implement work safety procedures to avoid health hazards and injuries.
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It Helps Employees Get Back To Work Sooner
Workers compensation insurance gives your sick or injured employees an access to reputable healthcare providers and other treatments you may need to fully recover.
What Insurance Do I Need as a Sole Trader?
In addition to workers compensation, other forms of insurance required by law include third party personal injury insurance and public liability insurance. Third party personal injury insurance is required for those who have a motor vehicle. On the other hand, third party personal injury insurance covers you for third-party death or injury.
Other Types of Insurance that Sole Traders Should Consider
Depending on the nature of your industry, sole traders should also consider investing in the following insurance covers:
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Contract Works Insurance
Contract works insurance is ideal for builders or those who work in the construction industry. Typically, this policy covers building works in progress or any loss or damage during the construction period.
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General Property Insurance
Another type of insurance that sole traders should consider is general property insurance. This type of policy can protect your business assets and operations. Depending on your policy, this insurance can cover accidental damage, theft, damage from fire, flood and earthquakes, rent loss, machinery breakdown and others.
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Income Protection Insurance
Since sole traders are not eligible to get workers compensation, income protection insurance is the most viable option. Like workers compensation, this also provides you with a financial safety net in case you get hurt or sick.
Workers Compensation Insurance Rules Per State: Who Needs it?
The rules for workers compensation insurance vary from city to city. Here’s a quick breakdown for your reference:
| City | Who Needs It | Typical Coverage |
| New South Wales (NSW) | All employers who pay annual wages of over $7,500. This can be provided for full time or part time employees and contractors or subcontractors, including apprenticeships and traineeships.
Note: Nature of work is not a factor |
|
| Victoria (VIC) | Employers who pay annual wages of over $7,500. This can be provided for full time or part time employees and contractors or subcontractors, including apprenticeships and traineeships.
Note: Nature of work is not a factor |
|
| Queensland (QLD) | All employers in QLD are required to get workers compensation insurance. |
|
| Western Australia (WA) | All employers in WA are required to get workers compensation insurance. |
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| South Australia (SA) | All employers who pay less than $13,760 annual wages.
Note: You need to report and pay for the minimum premium in case one of the employees get hurt or sick at work. |
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| Tasmania (TAS) | All businesses with employees. |
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| Australian Capital Territory (ACT) | All employers in ACT. |
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| Northern Territory (NT) | All employers in NT. |
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The Bottom Line
Clearly, getting an insurance policy is more than just state law compliance. This can be a great investment for sole traders, companies of all sizes and self-employed as well. Find a reputable insurance provider in Australia that offers comprehensive coverage at reasonable prices.
Tradies365 is the leading insurance provider in Australia. They specialise in providing comprehensive tradies insurance tailored to fit your budget and needs. Protect your business and your employees by investing in the right insurance. Get a free quote now!
Note: The material offered here is for informational purposes only. It does not constitute legally binding advice and should not be a substitute for a consultation with an insurance expert.