An independent contractor may need their own workers compensation insurance; business.gov.au gives no monetary figure for deciding that question and says the laws vary by state or territory. A business engaging a contractor should check the requirement with the relevant workers compensation regulator, while employers must obtain insurance from an authorised insurer. Figures checked 1 October 2026.
Does every independent contractor need their own workers compensation insurance?
Possibly, but the cited guidance does not apply an automatic yes-or-no test to everyone described as an independent contractor. It says an independent contractor may need their own insurance, which means the applicable state or territory regulator must determine the requirement for the particular arrangement.
The business.gov.au guidance does not state a nationwide earnings threshold, contract-value threshold or other monetary trigger. Do not treat a contractor’s status, industry or the wording of a contract as the final answer without checking the relevant regulator.
What should a business do when it engages a contractor?
The clearest action identified by business.gov.au is to check with the workers compensation regulator in the relevant state or territory.
- Identify the relevant jurisdiction. Workers compensation laws differ between each state and territory.
- Contact its workers compensation regulator. Explain the contractor arrangement and ask whether the contractor needs to hold their own cover.
- Ask how insurance must be obtained. Regulators can explain both compliance requirements and how to obtain workers compensation insurance.
- Check the policy PDS. Do not rely on a product description alone; confirm the actual cover and restrictions in the Product Disclosure Statement.
- Seek professional advice where needed. business.gov.au recommends professional advice on legally required insurance and further guidance from a licenced insurance broker, insurer or business adviser.
Which workers compensation regulator should the business check?
business.gov.au lists the following workers compensation regulators:
| State or territory | Workers compensation regulator |
|---|---|
| Australian Capital Territory | WorkSafe ACT |
| New South Wales | State Insurance Regulatory Authority |
| Northern Territory | NT WorkSafe |
| Queensland | WorkCover Queensland |
| South Australia | ReturnToWorkSA |
| Tasmania | WorkSafe Tasmania |
| Victoria | WorkSafe Victoria |
| Western Australia | WorkCover WA |
Check the regulator’s current guidance for the jurisdiction connected to the engagement rather than assuming another state or territory’s requirements apply.
Does a hiring business’s workers compensation policy cover an independent contractor?
The cited guidance describes workers compensation insurance as protecting employers and employees against financial hardship when work causes injury or sickness. It does not state that this automatically includes an independent contractor.
A business should therefore ask the regulator whether the contractor must hold separate cover. It should also read the relevant PDS before assuming that a policy responds to particular work, injuries or illness. Workers compensation requirements and policy coverage are separate questions: the regulator can confirm the legal requirement, while the PDS explains what a particular policy covers.
What is different for a sole trader?
business.gov.au specifically states that workers compensation insurance does not cover a sole trader and that the sole trader needs their own personal death, illness and disability insurance.
That should not be turned into a blanket statement that every independent contractor must buy one particular workers compensation policy. The correct requirement still depends on the applicable jurisdiction. For income protection, business.gov.au explains that:
- a private accident and sickness policy pays lost income while the person is recovering; and
- income protection covers part of a person’s income if sickness or an accident prevents them from working.
Check the PDS for the precise benefit and conditions rather than treating these products as the same as workers compensation insurance.
Must employers use an authorised insurer?
Yes. business.gov.au states that employers must obtain workers compensation insurance from an authorised insurer. It also points to the Australian Prudential Regulation Authority’s register as a way to find an authorised general insurer.
A business engaging an independent contractor should still resolve the contractor question with the relevant state or territory regulator rather than assuming that an employer policy settles it.
This is general information, not financial or legal advice. Check the regulator’s page for the current requirement and the policy PDS for its terms.
Sources
FAQ
Does every independent contractor need workers compensation insurance?
The cited national guidance says an independent contractor may need their own insurance but does not provide a uniform test for every contractor. Check with the workers compensation regulator in the relevant state or territory.
Can an independent contractor rely on the hiring business’s policy?
The cited guidance does not establish that a hiring business’s employees policy automatically covers an independent contractor. Confirm the requirement with the regulator and check the relevant PDS.
Does workers compensation insurance cover a sole trader?
business.gov.au states that it does not cover a sole trader. It says a sole trader should obtain their own personal death, illness and disability insurance.
Must an employer obtain workers compensation insurance from an authorised insurer?
Yes. business.gov.au states that employers must get workers compensation insurance from an authorised insurer.
What should I check before relying on a policy?
Check the regulator’s current guidance for the legal requirement, then read the policy PDS for the insured parties, cover and restrictions.
Partner links. Using them costs you nothing extra and may earn us a commission.