Types of Insurance That Every Business Owner Needs

by Joseph K. Clark

Becoming a business owner and building a new company from the ground up is an endeavor that requires savvy, hard work, and confidence in your own decisions. There is no harm in making missteps along the way––and by all accounts, most of these are healthy in your growth as an entrepreneur as it can be the best way to learn how to handle mistakes and avoid repeating them. For example, you may take some time to know what your target audience is and how to reach them through social media and blog posts. Or, it can take a few months to finesse a loyalty program and offer customers the discounts they’re genuinely interested in.


There are some decisions that you can’t afford to get wrong, however, especially if you are a new business owner. Failing to ensure your business or not making a purchase on certain types of insurance is the fastest way to be landed with a lawsuit and fines. In some countries, such as Australia, you are obligated to have insurance types and are mandatory if you want your business to succeed. The first step to ensuring that your new company is fully compliant with the land laws is to know what insurance policies you need.

Compulsory Insurance

Of the three mandatory types of insurance, only public/general liability insurance is necessary if you own a business in Australia. This is because the other two follow specific requirements. Workers Compensation is only required if you have employees, so this insurance is redundant if you are a sole trader or use outsourcing and agency staff. Similarly, the other compulsory insurance, Third Party Personal Insurance, is only necessary if you own a motor vehicle––regardless of whether it is used for business purposes or not.

Public Liability Insurance

Although public liability insurance is also only necessary for certain types of companies in Australia, it is likely to be most relevant to yours. This type of insurance provides protection from lawsuits brought about by a public member if they (or someone they represent) have been injured (or worse) on the grounds of––or the result of––your business. Public Liability insurance does not cover third parties who work for you, as this is covered by workers’ compensation, but instead covers active potential customers. Similarly, and like Workers Compensation insurance, it doesn’t cover bodily injury to yourself––for protection for yourself, you’d need a purchase a policy like life insurance or private insurance. If you fall ill and suffer a loss of income, you’ll need to be covering yourself privately with a personal insurance company to recoup and avoid a loss of earnings.

One of the most vital ideas for boosting your brand’s sales is to move to online sales in addition to brick-and-mortar stores. Plus, in light of the Covid-19 pandemic, many companies have had to move the majority of their retail business to online stores only. If your business is solely conducted online, then public liability insurance would only really be necessary if you manufacture or alter products before you sell them––again, to prevent customers from being injured as a result of your business and actions within.

Insurance Around The World

The rules on various insurance policies differ worldwide, though the available types are much the same. In the United Kingdom, public liability is seen as very important, but having public liability coverage is not required by law for business owners. That said, employer liability insurance (similar to workers’ compensation) is a legal requirement for any business owner with employees working for them. In the United States, the legal mandating of both employer liability insurance and public liability insurance is dependent on the ruling of the state, not on the federal government.

Also, business insurance for small businesses based in the United States may not be provided by an insurance company within the same country. Although the laws surrounding the insurance policies change from country to country, the providers sometimes don’t.

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