What insurance does a startup need in Australia?

What insurance does a startup need in Australia? For startups that employ workers, workers' compensation is a legal requirement; other covers may come from a licence, contract or commercial decision.

Startup insurance in Australia is not one policy. Which covers may become relevant depends on what the startup does, who its customers are, whether it holds data and what its contracts ask for.

Key takeaways

• Clients, landlords, partners and investors may ask a startup to hold specific covers at stated limits before a contract proceeds.
• The covers that may come up first differ for consultants, software and artificial intelligence startups, fintechs and hardware startups.
• A startup may review its cover after a pivot, a new product, a larger contract or a funding round.

What do the main startup insurance covers include and exclude?

Professional indemnity, cyber, public liability, products liability and workers' compensation insurance are each designed for a different kind of claim or loss.

Each cover is subject to the policy terms, conditions and exclusions. Cover depends on the policy and insurer you choose. Check the policy wording and its terms and conditions for what is and isn't included.

Professional indemnity insurance

Professional indemnity insurance is designed to cover claims that your advice, service or work caused a client financial loss. It may include legal defence costs, compensation and any settlement you are legally liable to pay, subject to the policy terms.

Exclusions commonly include, but are not limited to:

• refunds, or the cost of redoing, correcting or improving your own work
• injury or property damage from an accident connected with your business, which generally sits with public liability
• cyber incidents and data breaches, which generally sit with cyber insurance

Technology professional indemnity insurance

Software as a service (SaaS) and artificial intelligence (AI) startups may look at technology professional indemnity (Tech PI) insurance. Tech PI insurance is designed to cover claims that your advice, service or work caused a client financial loss. It may include legal defence costs, compensation and any settlement you are legally liable to pay, subject to the policy terms.

Exclusions commonly include, but are not limited to:

• service credits, liquidated damages and other liability you take on under a contract that would not otherwise exist under the law (contractual liability exclusion)
• physical injury or property damage
• claims and circumstances you knew about before the policy started

Cyber insurance

Cyber insurance is designed to cover costs after a data breach or cyber attack. First-party costs may include incident response, forensics, notifying affected people and data recovery. Third party cover may respond to claims from customers or regulators.

The small business cyber insurance guide explains what a cyber policy may include.

Exclusions commonly include, but are not limited to:

• intellectual property claims, such as patent or trade secret disputes, although an exception may apply to some software copyright claims
• incidents a senior executive knew about, or could reasonably foresee, before cover started
• outages at third party utilities or telecoms providers, unless the provider's own security failure directly caused them

Public and products liability insurance

Public liability insurance is designed to cover claims that someone was injured or their property was damaged in connection with your business. Products liability insurance is designed to cover claims that a product you made, sold or supplied caused injury or damage after it left your hands.

The two are usually arranged together as public and products liability insurance.

Exclusions commonly include, but are not limited to:

• liability arising from using a registered motor vehicle
• the cost to redo, correct or improve your own work or fix defects, although the policy may respond to resulting damage to someone else's property
• claims arising from professional advice or services provided for a fee, which generally sit with professional indemnity

Workers' compensation insurance

Workers' compensation insurance is designed to cover workers in case they get sick or injured because of work, under the relevant state or territory scheme.

What a workers' compensation policy excludes depends on your state or territory scheme. Exclusions commonly include, but are not limited to:

• exemplary or punitive damages, which a court may award on top of other damages as a punishment
• damages claims brought against you outside Australia

Important: These lists are not exhaustive. Exclusions vary between insurers. Always refer to the policy wording and its terms and conditions for the exclusions that apply to you, and if you have questions you should speak to your insurance broker or the upcover team.

What insurance does a startup need by business type and stage?

Covers that may come up first include Tech PI and cyber insurance for software and AI startups, professional indemnity for consultants and public and products liability insurance for hardware startups.

Is startup insurance legally required, contractually required or a commercial decision?

Workers' compensation is a legal requirement for employers. Other covers may be required by a licence or contract. Some are a commercial decision.

Legally required. As at the time of writing (October 2026), Safe Work Australia says "Under Australian law, employers must have insurance to cover their workers in case they get sick or injured because of work".

The laws vary in each state and territory. Who counts as a worker, and any exemptions, depend on your state or territory scheme.

A licence may also carry insurance rules. Australian financial services licensees serving retail clients must have compensation arrangements in place under the Corporations Act. ASIC Regulatory Guide 126 sets out how professional indemnity insurance is used to meet that obligation. The fintech startup guide explains more.

Contractually required. Client contracts, landlord leases, partner agreements and investor term sheets may ask for professional indemnity, Tech PI, cyber or public liability insurance at stated limits. A contract may not proceed until the startup shows evidence of that insurance.

Commercial decision. Other covers may be arranged because the startup sees an exposure. Examples include cyber insurance where it holds customer data and products liability insurance where it sells goods.

What can change business insurance for startups as they grow?

A pivot, a new product, a larger contract or a funding round may mean a startup's policy schedule no longer describes what it does.

A professional indemnity policy is designed to respond to claims arising from the professional services described on your policy schedule. If a client makes a claim about a service your schedule leaves out, the insurer may consider declining it if they were not aware of the activity and would not have agreed to cover it.

Enterprise customers may ask for higher limits or extra covers before signing, as the software and SaaS startup guide explains.

A funding round or a new board may bring questions about directors' duties. Business.gov.au explains that directors may be held personally liable for breaches of their legal obligations. The founder and director guide explains the insurance questions this may raise.

Questions a startup may ask at each change include:

• When was the last time I reviewed my insurance?
• Has my business or activities changed including revenue, employees, activities or customers?
• Have my requirements for licensing or contractual requirements increased or been reduced?

What affects the cost of startup insurance?

Your price may depend on factors including your industry classification, your revenue and the stage of your business. Licensing, professional or contractual requirements may also influence the limit of insurance you consider, which may affect the cost.

The startup cost guide explains startup business insurance costs in more detail.

How upcover can help

upcover arranges insurance for startups and technology businesses across Australia. upcover works with 80+ insurance partners and can arrange quotes from a range of insurers.

• 70,000+ businesses covered across Australia
• 4.9/5 customer rating
• 80+ insurance partners

Get a quote for startup insurance in Australia.

Frequently asked questions

What insurance does a startup need before raising capital?

Investors may review a startup's professional indemnity and cyber insurance information during due diligence, as the startup insurance due diligence guide explains.

When should a startup get insurance?

A startup may consider cover before a milestone that creates an exposure, such as a client contract, lease, first hire, product launch or funding round. The guide to when a startup may need insurance walks through each milestone.

What is the difference between professional indemnity and Tech PI?

The startup professional indemnity guide says Tech PI "is commonly considered where the technology itself can cause client loss". The same guide says "Standard PI is commonly used for businesses that provide advice, consulting, professional services or specialist work".

What is a certificate of currency?

A certificate of currency is a document that "confirms that an insurance policy is active for a specific business or project". Clients, landlords and investors may ask for one as evidence that a policy is in place, but it does not replace the policy wording.

Does a Pty Ltd company replace startup insurance?

A company structure limits what members owe: business.gov.au says that as a member, "you're not liable (in your capacity as a member) for the company's debts". Insurance policies are designed to respond to claims and losses, such as a client's claim against the company, subject to the policy terms.

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_{Written by upcover's editorial team.}

_{This article provides general information only and does not take into account your objectives, financial situation or needs. It is not legal advice: get legal advice about your obligations as an employer, any licence conditions that apply to your business and the insurance terms in your contracts. Workers' compensation requirements vary by state and territory. Insurance availability and cover are subject to underwriting and the terms, conditions, limits and exclusions of the relevant policy. Read the policy wording and its terms and conditions before deciding. upcover arranges insurance products with selected insurers and underwriters and does not compare all general insurers or insurance products available in the market.}