Public Liability vs Professional Indemnity - Which Insurance Does a Sole Trader Really Need?

If you’re a sole trader, one unexpected claim can wipe out years of work. The right insurance keeps your personal assets safe and meets the requirements of bigger clients.

The good news? Most sole traders only need to choose between a few main policies depending on your business activity.

In this guide, we’ll cover:

• What public liability and professional indemnity actually protect you from
• Which types of sole traders typically need each cover
• Typical premium ranges in 2025
• Key policy features to compare before buying
• Whether premiums are tax-deductible

What's the difference?

• Public liability - covers injuries or property damage you cause. Example: a client trips on your studio floor, or your drill scratches a customer’s car.
• Professional indemnity - covers financial loss from negligent advice or service mistakes. Example: an architect’s drawing error or tax advice that results in ATO penalties.

Knowing the difference means buying the cover you need, not just what someone tells you to buy.

Do you need one, the other, or both?

• Public liability: Common for tradies, handy persons, market-stall sellers - usually at least $10 million cover depending on your business.
• Professional indemnity: Common for consultants, designers, accountants - $1–$2 million is common in low-risk fields.
• Both covers: Often taken by health and wellness practitioners, who risk both injury and advice claims.
• eCommerce sole traders: If you attend markets or arrange courier pickups, public liability is usually needed for third-party injuries or damaged goods.

💡 Tip: Check customer contracts - many specify minimum cover levels.

Typical premiums in 2025 (estimate)

• Public liability: From $450–$650/year for turnover under $75,000
• Professional indemnity: From $380–$600/year for low-risk fields
• At $200,000 turnover: $650–$1,100 (liability) and from $1,000+ (indemnity)
• High turnover or higher-risk industries: Budget $1,000+ for liability and $1,500+ for indemnity

Premiums vary with occupation, claims history, and state stamp duty - get multiple quotes before committing.

Five policy features to compare - beyond price

1. Limit of indemnity - max insurer payout per claim and per year
2. Excess - amount you pay before cover starts
3. Retroactive date (indemnity only) - covers work before the policy start date
4. Run-off cover - protection after you stop trading
5. Territorial & jurisdiction limits - important if serving overseas clients

Are premiums tax-deductible?

Yes. Both public-liability and professional-indemnity premiums are fully deductible, and you can claim the GST credit if you’re registered. For more potential write-offs, see our sole-trader tax deductions guide.

Ensure you’re business is protected

Carrying the right insurance keeps your personal assets safe and can help you win bigger clients. Work out which risks apply to you, compare limits and exclusions, and lock in cover before your next job starts.

If you’re still setting up, make sure you have an ABN - apply online in five minutes.