Do I Need Insurance If I Have an ABN?

An Australian Business Number (ABN) is a unique 11-digit number that identifies your business to the government, other businesses and the public. You register for one through the Australian Business Register (ABR), which the Australian Taxation Office (ATO) manages (business.gov.au). You use it for business activities such as invoicing, tax reporting and dealing with the Australian government. This blog answers the two questions people ask about ABN insurance: whether you need insurance once you have an ABN, and whether you need an ABN to get business insurance as a sole trader.

Do you need insurance once you have an ABN?

The insurance the law asks for depends on the type of business you run, not on having an ABN. By law you may need workers compensation insurance if you have employees, third party personal injury insurance (often called CTP) if your business uses motor vehicles, and public liability insurance, which some states and territories need for certain occupations. Other types of insurance are your choice (business.gov.au). Head contractors and clients often ask for public liability too, so check your contracts. Read is public liability insurance compulsory?

Do you need an ABN for sole trader business insurance?

No, a sole trader does not usually need an Australian Business Number (ABN) to take out business insurance. Insurers typically do not require an ABN before they offer cover, though some may ask for it to be included on the policy, depending on their requirements.

While an ABN is not a legal necessity for insurance purposes, it is worth having one if you run a business. To get one you need to be running a business or other enterprise. An ABN lets you verify your business to others when ordering and invoicing, avoid pay as you go (PAYG) tax on payments you get, and claim goods and services tax (GST) credits (business.gov.au).

As a sole trader, you may need several types of insurance, including professional indemnity insurance, public liability insurance for tradies and personal accident and illness insurance, depending on the nature of your business.

Can an ABN affect my insurance?

While having an Australian Business Number (ABN) is not a strict requirement for getting sole trader insurance, it can matter in a few ways:

1. Business identification and credibility

Having an ABN helps establish your business as a legitimate entity in the eyes of insurers. It provides a clear distinction between your personal and business activities, making it easier for insurers to understand the scope of your business. This can influence the type of cover you're offered, as insurers may prefer dealing with officially registered businesses when they assess risk.

2. Cover that matches your business

An ABN may help insurers match your cover to your business activities. For example, some types of business insurance, such as public liability or professional indemnity, may ask you to be registered for tax purposes. Having your ABN on the policy helps show that the policy is for your business activities rather than personal ones.

3. GST on your premium

If your business is registered for GST, you can generally claim a GST credit for the GST included in the price of things you use in your business (ATO), which can include the GST in business insurance premiums. Ask your accountant how this applies to you.

Talk to Tradies365 about sole trader insurance. Our brokers compare policies from insurers and help you choose cover for the work you do. Get a quote or contact us.

How to apply for an ABN

There is no fee to register for an ABN through the ABR (business.gov.au). Below is a step-by-step guide to help you apply for an ABN online:

Visit the Australian Business Register (ABR) website to apply for an ABN
Provide your business information
Enter your contact information
Describe your business activities
Submit your application

What to have ready

Before you apply, have these ready (business.gov.au):

Your business structure, for example sole trader or company
Proof of identity
Details of your business activities
Details of any associates

Your tax file number (TFN) also helps the ABR identify you, so your application can be processed faster (ABR).

At Tradies365, our brokers arrange cover with insurers for sole traders, tradesmen and business owners across Australia. Whether you're a plumber, electrician or any other tradesperson, we can help you choose cover for the work you do. What is covered depends on the policy the insurer offers.

Contact Tradies365 to talk about cover for your business.

Or get a quote.

General advice only. Read the policy documents we send with your quote before you decide.