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Startup Business Insurance
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Why do startups need insurance?
Startups face many of the same risks as bigger businesses, but with fewer resources to handle an accident or lawsuit. Business insurance protects your growing company from legal fees, costly repairs, and medical expenses.
What types of business insurance do startups need?
These insurance policies cover common risks faced by startups.
General liability insurance
General liability insurance covers the cost of third-party accidents, such as a client who trips and suffers a bodily injury at your office. It may be required for a commercial lease.
BEST FOR
- Slip-and-fall accidents
- Accidents that damage client property
- Product liability insurance
Errors and omissions insurance
E&O insurance protects startups who offer professional services from financial losses related to mistakes and oversights. It's sometimes referred to as professional liability insurance.
BEST FOR
- Errors that cause a client to lose money
- Accusations of negligence
- Missed deadlines
Workers' compensation insurance
Workers’ comp shields startups from work-related medical bills that health insurance might deny. Most states require it for businesses with employees.
BEST FOR
- Work-related medical expenses
- Disability benefits
- Lawsuits from employee injuries
Cyber liability insurance
This type of coverage helps startups recover from data breaches and cyberattacks. It's strongly recommended for any small business that handles credit cards or other personal data.
BEST FOR
- Data breach notification costs
- Data breach investigations
- PR costs for reputational harm
Business owner's policy
A BOP bundles general liability coverage and commercial property insurance at a discount. It protects against the most common lawsuits and business property damage.
BEST FOR
- Accidents that harm clients
- Stolen or damaged business property
- Business interruption insurance
Employment practices liability insurance
EPLI insurance coverage helps pay for legal expenses when an employee sues your startup for discrimination, harassment, wrongful termination, or a similar employment issue.
BEST FOR
- Wrongful termination claims
- Discrimination claims
- Other violations of employee rights
Commercial auto insurance
This policy covers costs when a vehicle owned by a startup is involved in an accident. Each state has its own requirements for auto liability insurance.
BEST FOR
- Auto accident injuries
- Property damage caused by your vehicle
- Vehicle theft and vandalism
Directors and officers insurance
D&O insurance covers lawsuits related to decisions made by officers and board members on behalf of your startup, including lawsuits from dissatisfied investors.
BEST FOR
- Lack of transparency
- Mismanaged funds
- Failure to comply with regulations
Commercial property insurance
This policy covers costs when a startup's business property is damaged, destroyed, or stolen. You can combine it with general liability insurance in a BOP for a discount.
BEST FOR
- Fires
- Storm damage
- Theft of expensive equipment
Looking for different coverage? See more policies.
How much does business insurance cost for startups?
Startups often qualify for discounts on business insurance. Factors that affect your premium include your profession, business location, and the policy's limits and deductible.
Here are the average costs for top policies sold by Insureon:
General liability insurance: $42 per month
Professional liability: $61 per month
Workers' comp: $45 per month
Find business insurance requirements in your state
Select your state to learn about insurance requirements for your small business.
Common questions about business insurance for startups
Why is insurance important for startups?
Here are a few reasons why insurance is crucial for startups, sole proprietors, independent contractors, and other small business structures.
You may need insurance coverage to sign a contract or a lease. Clients and landlords may require you to carry insurance to protect themselves against potential losses. In some cases, they may ask you to list them as an additional insured on your policy.
You may need insurance to comply with the law. Depending on the laws in your state, you may need coverage for a business-owned vehicle, to obtain a license in your field, or to protect against work-related injuries.
Insurance protects your startup from catastrophic losses. Insurance gives entrepreneurs peace of mind knowing they’re protected financially against customer accidents, fires, and other incidents that might otherwise prove devastating.
You gain client trust by being insured. Even when it's not required, a certificate of insurance proves that your business can handle the cost of a lawsuit or accident, which can help attract clients.
Insurance can help secure top talent. D&O insurance for startups affords protection to board members and directors for their decisions, which can help attract experts to the positions.
How do I get a certificate of insurance?
With Insureon, small business owners can usually get a certificate of insurance on the same day that you apply for quotes. It’s a simple three-step process:
- Fill out our easy online application.
- Compare free quotes from top-rated insurance providers.
- Buy a policy and download a certificate of insurance.
A certificate of insurance will outline the details of your business liability insurance, such as policy limits, deductibles, and any endorsements. It serves as proof of insurance for clients, landlords, lenders, and anyone else who asks whether your business is insured.
Does my profession affect what type of insurance I need?
Yes, the type of work you do affects your insurance needs.
Tech startups should carry technology errors and omissions insurance (tech E&O), which bundles protection against cyber risks and professional mistakes.
The laws in your state may also require you to carry a liability policy, depending on your field.
Whether your looking to start an IT services business or currently own a tech company or other kind of startup, insurance is a crucial part of risk management. It may take a little research to find out what type of business insurance you need, or a licensed insurance agent can help you find the right coverage.
How can I save money on business insurance?
Commercial insurance is usually affordable for startups and low-risk small businesses. There are a few ways to find cheaper insurance:
Bundle policies. Startup founders can often buy general liability coverage and commercial property insurance together in a business owner's policy, which costs less than purchasing each policy separately. A tech E&O policy can also save you money on cyber insurance and E&O insurance.
Shop around. Compare insurance options from different providers to make sure you're not paying too much for insurance. Insureon provides an easy way to achieve this with our free online application.
Choose a high deductible. You can customize your insurance policy to save money, such as by choosing a higher deductible or lower policy limits.
Avoid claims. Finally, take steps to reduce your business's risks. Prompt cleanup of spills, the elimination of clutter, and bright lighting can help your business avoid accidents and subsequent liability claims, which helps keep your premiums low.
What other types of coverage do startups need?
The policies you need depend on the specifics of your business, such as whether you drive for work or have a client who requires a certain type of coverage.
Other insurance policies you may need include:
Hired and non-owned auto insurance: An HNOA policy provides liability protection when startup owners or employees drive their own vehicle for work. It also covers leased and rented vehicles.
Commercial crime insurance: Crime insurance, such as a fidelity bond, can reimburse clients for employee theft, including electronic funds transfer. It may be required by a client contract.
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