Key Takeaways:
- Workers Compensation insurance is mandatory if you hire anyone. It covers employees for work-related injuries or illnesses.
- Personal Accident insurance is an optional cover for sole traders, contractors, and working directors. It helps if you’re off work from injury or illness (if selected).
- If you’re a sole trader, you can’t get Workers Compensation for yourself. Personal Accident cover can fill that gap.
- Depending on how you’re set up, you might need one or both.
- Getting it sorted now can save you a lot of grief later on
If you’re running your own trade business, it’s easy to get insurance types crossed. Personal Accident insurance vs Workers Compensation sounds like the same thing. Both deal with injury. Both pay income. But they’re designed for completely different situations.
This guide breaks it down in plain English, so if you’re working solo, hiring, or somewhere in between, you’ll know exactly where you stand by the end.
What is Workers Compensation insurance?
Workers Compensation insurance is for when you’ve got people working for you. It’s legally required across all Australian states and territories if you hire anyone, including apprentices, casuals or admin help.
It typically includes:
- Lost wages while they’re off work
- Medical expenses and treatment
- Rehab and return-to-work support
- Lump sum payments for permanent impairment or death
But if you’re a sole trader working alone, you’re not covered. That’s because you’re not considered an employee of your own business. Even as a company director working on the tools, you may not be covered unless your policy is set up correctly.
If you’re based in WA, where things are overlooked by WorkSafeWA, or in the NT, All Trades Cover can arrange Workers Compensation directly. For other states, we’ll guide you through the process and help you get the right setup.
What is Personal Accident insurance?
Trade work is tough on the body. One slip, strain or unexpected injury can put you off the tools fast. If you’re a sole trader or working director without Workers Compensation, you need a plan to keep your income coming in while you recover.
That’s where Personal Accident insurance comes in.
Also known as Personal Accident and Illness, this cover protects tradies who aren’t eligible for Workers Compensation. If you suffer an accidental injury or illness (when selected), it helps cover lost income and other expenses, even if the injury happens off the job.
A policy can include:
- Weekly income replacement, usually up to 85% of your average earnings
- For benefits under $1,500 per week, no financial proof is required
- For higher benefit amounts, financial documentation may be needed
- Minor broken bone benefits included (not full medical or hospital cover)
- Lump sum payouts available for serious or permanent injuries (if selected)
- Optional extras available like illness cover or business expense support
Lifting gear, climbing ladders, working in crawlspaces or handling awkward tools all come with risk. For tradies running solo or without backup, this cover can keep your business and bank account steady while you get back on your feet. You can also bundle it into broader cover like builder’s insurance, roofing insurance or electrician insurance.
What’s the difference?
To make the differences between Personal Accident insurance vs Workers Compensation easier to understand, here’s a practical side-by-side breakdown:
| Feature | Workers Compensation | Personal Accident insurance |
|---|---|---|
| Covers | Employees and apprentices | Sole traders and self-employed tradies |
| Required by law? | Yes (if you hire staff) | No, but highly recommended |
| Covers medical costs? | Yes | Sometimes, depending on policy |
| Weekly income replacement | Yes (as per statutory limits) | Yes (up to 85% or agreed value) |
| Covers off-the-job incidents? | No | Yes, 24/7 |
| Who arranges it? | Usually arranged by the employer (ideally through a broker) | You (or your broker) |
Each serves a different purpose. One protects your workers. The other protects you.
Real claims. Real tradies.
Ben – Heavy Plant Operator, WA
Ben stepped down from his excavator onto uneven ground and rolled his ankle badly. With no one else licensed to operate his gear, the job came to a halt. His Personal Accident, bundled into his heavy machinery insurance, paid weekly benefits that covered the mortgage and kept his cash flow steady while he recovered.
Amelia – Landscaper, VIC
Amelia strained her lower back loading sandstone pavers solo. Being her own boss meant no paid leave and no help picking up the slack. Her landscaping insurance setup included Personal Accident insurance, which gave her weekly income support for five weeks. That was just enough to heal properly without losing regular clients.
Liam – Carpenter, QLD
Liam fell from a ladder while fixing roof framing on a residential build and suffered a mild concussion. He was cleared to return after two weeks, but couldn’t work in the meantime. His Personal Accident Insurance, included in his carpentry cover, kicked in after the waiting period and helped with bills while he got back on his feet.
Tanya – Earthmoving Contractor, WA
Tanya hired a subcontractor to help on a large site job. He worked full-time hours, used her gear, and operated under her company banner. When he injured his knee stepping down from a loader, Tanya was held liable as the ‘employer’ under WA law. With no Workers’ Compensation in place with her excavation insurance, the claim and penalties came out of her pocket.
When do you need both?
Your business structure often determines whether you need one or both types of cover. Here’s a simple guide:
| Scenario | You Need Workers Compensation | You Need Personal Accident insurance |
|---|---|---|
| Sole trader, no employees | No | Yes |
| Sole trader who hires a casual or apprentice | Yes | Yes (to protect yourself) |
| Company director working on the tools | Depends on the state | Yes |
| Using subcontractors regularly | Possibly (if they’re deemed workers) | Yes |
Using subcontractors doesn’t automatically exempt you from needing Workers Compensation. If they work mainly for you, use your equipment, or wear your brand, you could still be held responsible.
If you’re unsure, our team can help assess your risk and recommend the right cover.
Why it pays to get it right
The reality is, there’s no one-size-fits-all answer when it comes to Personal Accident insurance vs Workers Compensation. Your risk depends on how your business operates, who’s working with you, and what would happen if you couldn’t work tomorrow.
We’ve worked with thousands of tradies who thought they were covered until they weren’t. Whether it’s fines, uncovered injuries, or project blowouts, the consequences are too big to leave to chance.
Getting this sorted is not just about compliance. It’s peace of mind.
What cover should you have?
If you’re working solo:
- Public Liability insurance for third-party property damage or injury
- Personal Accident insurance to cover your income if you’re off work
If you’re employing anyone:
- Workers Compensation is legally required
- You should still have Personal Accident insurance for yourself
Each trade comes with different risks. So, regardless of whether you’re in structural steel erection, arborist work, or maybe even mining and civil projects, your policy should match how you actually work.
Get the right cover with All Trades Cover
At All Trades Cover, we understand trade businesses because we’ve walked the same path. We’ll help you figure out exactly what you need. Nothing more, nothing less. And we’ll make sure you’re properly protected, whether you’re on the tools or running the team.
No confusing jargon. No generic policies. Just real advice from a team that gets how the job works.Get a fast, personalised quote now or contact us today to talk through your options.
Frequently Asked Questions
- How do I know if a subcontractor needs to be covered under Workers Compensation?
If the subcontractor works mainly for you, uses your tools, or follows your schedule, you might be responsible for their cover depending on your state laws. It’s worth checking with your broker.
- What happens if I don’t have Workers Compensation and someone gets injured?
You could be liable for medical expenses, lost wages, and fines. The risk increases significantly if you’ve hired someone casually or misclassified a worker as a subcontractor.
- Do I need Personal Accident insurance if I have Public Liability?
Yes. Public Liability protects you if someone else is injured or their property is damaged. It doesn’t cover you if you get injured or sick and can’t work.
- Is Personal Accident insurance tax-deductible for sole traders?
In many cases, yes, but it depends on how the policy is structured and used. Speak with your accountant to clarify deductibility for your specific setup.
- What is an ‘Excess Period’ in a Personal Accident insurance policy?
It’s the waiting period before benefits start being paid. For example, if your excess is 14 days, payments start on day 15 of your recovery.
