Sole Trader Insurance NZ: What a One-Person Business Needs

What clients and landlords ask sole traders for

• A minimum limit named in the contract or tender
• A certificate of currency for the lease or venue
• Cover that matches the rules of your platform or franchise
• Rules from your licensing or membership body, if you have one

Damage on a client site

With no company in between, the claim lands on you personally.

Advice that cost a client

Public liability does not respond to a bad recommendation.

Stolen or dropped gear

Your laptop or toolkit is not covered by liability insurance.

Work in a personal car

A personal policy may not respond to business use.

Work out what to raise

Tick what applies to you

• I work on client sites or in their homes

  Damage to a client's property lands on you personally.

  Covers to raise: Public liability, Tools and equipment

• I sell advice, design, reports or IT work

  Public liability does not respond to a bad recommendation.

  Covers to raise: Professional indemnity

• I carry tools, a laptop or a camera

  Covers to raise: Tools and equipment

• I use a car or van for work

  A personal car policy may not respond to business use.

  Covers to raise: Business vehicles

• I hold client data or pay suppliers by transfer

  Covers to raise: Cyber

• A client, landlord or platform has asked for proof of cover

  The contract usually names the limit and the cover type.

  Covers to raise: Public liability

• I sell from a market stall or hired venue

  Covers to raise: Public liability

• Someone helps me now and then

  Tell the adviser, as it can change how the work is described.

  Covers to raise: Public liability

What these covers do not pay

• Redoing your own faulty work. Damage it causes to someone else's property may be a different matter.
• Your own laptop or toolkit under a public liability policy.
• Advice or design errors under a liability policy. That is professional indemnity territory.
• Your own time off if you are sick. ACC covers injury within limits, not illness.
• Health and safety fines, which can never be insured (Health and Safety at Work Act 2015, s 29).

General information only. Whether a cover responds depends on the policy wording.

Which clause is in your contract?

• Professional standard

  You agree to work with reasonable skill and care, or to a named industry standard. If the work falls short, that is the test a client may use against you.

  Covers to raise: Professional indemnity

  What it does not decide: It does not decide whether a claim for falling short is covered. Professional indemnity wordings differ on what is excluded, such as guarantees, fee disputes and known issues.

• Own tools and plant

  The contract says you bring and look after your own tools, equipment or machinery, so damage or theft of them sits with you rather than the client.

  Covers to raise: Tools and equipment, Business vehicles

  What it does not decide: It does not decide whether those items are insured, on site or in a vehicle, or hired in. Contract works and public liability policies usually do not pick up your own tools.

• Limitation of liability

  A cap on what you could owe the client if something goes wrong, often tied to your fees or a set figure. It can also exclude certain losses such as lost profit.

  Covers to raise: Professional indemnity, Public liability

  What it does not decide: It does not decide what your insurance pays. A cap in the contract may sit below or above your policy limit, and some claims, such as personal injury, may fall outside it.

General information, not legal advice. The full clause and the policy wording decide how it applies.

Check your certificate of currency against the contract

Check the insured name, limit and dates match the contract. The policy wording, not the certificate, decides what is covered. How a certificate of currency works

What each cover may pay, and what it usually does not

• Public liability

  May respond to

  Damage to other people's property or injury to a member of the public, plus legal defence costs.

  Common trigger

  Work on a client site, a stall, or a visitor to your premises.

  Usually not covered

  Your own faulty work, your own tools, and advice errors.

• Professional indemnity

  May respond to

  A claim that your advice, design or report cost a client money.

  Common trigger

  A client disputes a recommendation, error or missed deadline.

  Usually not covered

  Physical damage to property, and claims first made outside the policy period.

• Tools and equipment

  May respond to

  Loss or damage to your own tools, laptop or camera.

  Common trigger

  Theft, accidental damage or fire.

  Usually not covered

  Wear and tear, and some theft from unattended vehicles unless the wording allows it.

• Business vehicles

  May respond to

  Damage to a vehicle used for work, and liability to others on the road.

  Common trigger

  A crash or theft while the vehicle is on a job.

  Usually not covered

  Use outside what the policy describes, such as carrying paying passengers on a personal policy.

• Cyber

  May respond to

  Costs after a data breach or fraud, depending on the wording.

  Common trigger

  A phishing email, ransomware or lost client data.

  Usually not covered

  Losses from poor security the policy excludes, and upgrades to your systems.

If something goes wrong

• A hidden pipe

  A sole trader drilling into a client's wall hits a concealed water pipe and floods the room below.

  May respond: Public liability

  Have ready

  • Photos of the damage and the site
  • The job quote and invoice
  • Your policy schedule
  • The name and contact of the client

• A report that cost a client

  A consultant's report contains an error, and the client says it led to a costly decision.

  May respond: Professional indemnity

  Have ready

  • The signed brief or contract
  • The report and any drafts
  • Emails with the client
  • The date you first heard of the complaint

• Gear taken from the van

  A tradesperson's toolkit is stolen from a parked van overnight.

  May respond: Tools and equipment, Business vehicles

  Have ready

  • A police report
  • Receipts or a list of the tools
  • Photos of the vehicle and any forced entry
  • Where the van was parked and whether it was locked

• A phishing payment

  A fake email changes a supplier's bank details and one payment goes to the wrong account.

  May respond: Cyber

  Have ready

  • The original and fake emails
  • Your bank's records of the transfer
  • Screenshots of anything unusual
  • A note of who had access to the account

Typical examples, not real claims. ACC deals with most injuries, so an injury claim is mostly about property and legal costs. Whether a claim is paid depends on the policy wording and the facts.

Related industries

• Insurance for business owners
• Insurance for cleaners
• Insurance for personal trainers and gyms

Protect the people behind the business

Liability cover protects the business from claims. If you or a business partner could not work, or died, key person and shareholder cover can help keep the business, and your family, going.

• Key person cover, if the business relies on you
• Shareholder cover, so partners can buy each other out
• Income protection for owners and the self-employed

Start from what your contract asks for

A licensed Smiths adviser phones you and asks what you do, who you work for and what the contract asks you to carry. If we refer you to another licensed firm, we tell you who first. Smiths Insurance & KiwiSaver may receive a commission or referral payment if you buy.

A licensed Smiths adviser phones you. If we refer you to another licensed firm we tell you who first and how they are paid.