Launching a startup is a full-contact sport. You’re hiring fast, shipping product, storing customer data, signing contracts, and learning in public. Insurance won’t write code or close deals for you—but the right policies keep a stumble from turning into a company-ending fall. This guide cuts through the jargon to show which coverages most early-stage teams truly need, what’s optional, and what you can safely defer.
Step 1: Map your actual risks (a 15-minute exercise)
Before buying anything, sketch a quick risk map. On one side, list the things that could go wrong; on the other, the policy types that address them.
- People risks: hiring/firing mistakes, harassment claims, workplace injuries.
- Product/service risks: bugs, downtime, bad advice, integration failures.
- Data & cyber risks: breaches, ransomware, wire fraud, regulatory penalties.
- Property/operational risks: laptops, prototypes, leased office space, events.
- Financial/strategic risks: investor disputes, board decisions, misstatements.
Draw a thick line between likely or severe risks and the policies that address them. That thick line is your “buy now” list.
The non-negotiables (buy these early)
1) General Liability (GL)
What it is: Protection if a third party claims bodily injury, property damage, or personal/advertising injury (e.g., a visitor trips at your demo day; a competitor says your ad is defamatory).
Why it matters: Landlords and venues require it, and many partners do, too. It’s the baseline for doing business in the physical world.
What to get: Typically $1M per occurrence / $2M aggregate, with the ability to add additional insured endorsements for landlords, customers, or event hosts.
Skip? No. This is table stakes.
2) Business Property (often bundled in a BOP)
What it is: Coverage for your stuff—laptops, monitors, prototypes—and sometimes business interruption if a covered event shuts you down.
Why it matters: Even remote teams depend on hardware. Replacing a dozen laptops out of pocket hurts.
What to get: Choose replacement cost (not actual cash value). Ensure off-premises coverage for gear that travels. If you rely on a co-location facility or critical vendor, explore contingent business interruption.
Skip? Not if you own equipment you’d hate to repurchase.
3) Workers’ Compensation (and Employers’ Liability)
What it is: Statutory coverage for employee injuries/illnesses arising from work; employers’ liability protects the company from related lawsuits.
Why it matters: It’s legally required once you hire employees in most jurisdictions, including for remote staff based in different states or countries.
What to get: Make sure payroll and states are accurate and updated annually. Add new locations as you hire.
Skip? Only if you have no employees yet. Contractors alone may not trigger it—but check local rules.
4) Professional Liability / Errors & Omissions (E&O)
What it is: Coverage when your work allegedly causes a client’s loss—bad advice, missed deadlines, buggy integrations, failed SLAs.
Why it matters: Any B2B startup selling software or services should carry E&O. Enterprise buyers often make it a contract requirement.
What to get: Seek tech E&O forms that contemplate software. Ensure contractual liability carve-backs (so your indemnities don’t void coverage). Many carriers bundle E&O with cyber—convenient and efficient.
Skip? Not if you have pilots, paying customers, or indemnities in your MSA.
5) Cyber Liability (Network Security & Privacy)
What it is: Breach response, ransomware negotiation, data restoration, regulatory defense (where insurable), customer notification, credit monitoring, and business interruption from cyber events.
Why it matters: Nearly every startup stores data or relies on cloud services. Incidents are costly even at small scale.
What to get: Look for robust sublimits for ransomware and social engineering, not just token amounts. Expect underwriters to ask about MFA, backups, endpoint protection, and privileged access. Many policies include pre-vetted breach coaches and IR firms—huge value when the clock is ticking.
Skip? No. If you touch data, buy it.
Likely needs (buy if they apply—many do)
6) Directors & Officers (D&O)
What it is: Protects the company’s leaders and board against claims of mismanagement, breach of fiduciary duty, or misleading statements.
Why it matters: Outside directors and investors often require it, typically around your first priced equity round or when formalizing a board.
What to get: Understand Side A (individuals), Side B (reimbursement), and Side C (entity, usually for securities claims). Start with modest limits and scale after Series A.
Skip for now? If you’re pre-seed with only founders on the board.
7) Employment Practices Liability (EPLI)
What it is: Claims involving hiring/firing, discrimination, harassment, retaliation, and sometimes wage-and-hour (often sublimited for defense only).
Why it matters: Once you have employees—especially distributed teams—this exposure becomes real.
What to get: Ensure third-party coverage (e.g., a customer claims harassment). Strong HR policies and documented training help pricing.
Skip for now? Maybe if you’re ≤5 employees with a tight budget—but it’s a calculated risk.
8) IP/Media Liability
What it is: Defense and damages for copyright/trademark allegations; patent is often separate, limited, or excluded.
Why it matters: Consumer brands, content platforms, dev tools, or products that interface with others’ IP are higher risk.
What to get: Confirm whether patent has any coverage or optional buy-backs. If you host user-generated content, make sure the form contemplates platform risks.
Skip for now? If your product is not content-heavy and you aren’t in a patent-dense space.
9) Commercial Auto (Hired & Non-Owned Auto, HNOA)
What it is: Liability when employees drive personal or rented cars for work.
Why it matters: A sales visit or airport run can create exposure even if you own no vehicles.
What to get: HNOA is inexpensive and fills a big gap.
Skip for now? If nobody drives for work at all—but confirm realities (conferences, onsite meetings).
10) Umbrella / Excess Liability
What it is: Additional limits sitting above GL, auto, and employers’ liability.
Why it matters: Efficient way to meet contract requirements for higher limits.
What to get: Buy just enough to satisfy enterprise or landlord demands; add more as your footprint grows.
Skip for now? If no contract requires it and your exposure is limited.
11) Key Person Life & Disability
What it is: A payout if a crucial founder or engineer dies or becomes disabled.
Why it matters: If one person’s absence would materially threaten continuity, this policy buys time.
Skip for now? If responsibilities are distributed and you’ve built redundancy.
Nice-to-haves or industry-specific
- Crime/Fidelity (incl. social engineering): Covers employee theft, wire fraud, and forgery. Helpful if you move customer funds or large vendor payments. Sometimes overlaps with cyber—check both.
- Inland Marine/Equipment Floater: For movable equipment, prototypes, and gear outside the office. Vital for hardware/robotics; less so for pure-software teams.
- Product Liability (stand-alone): GL includes product liability, but certain industries (wearables, ingestibles, medical-adjacent) need specialized forms and higher limits.
- Cargo/Transit, Marine, or Aviation: If you ship high-value goods or operate drones, these are relevant.
Claims-made vs. occurrence (avoid a silent gap)
- Occurrence policies (GL, property) cover events that happen during the policy period, even if the claim arrives later.
- Claims-made policies (E&O, cyber, D&O, EPLI) cover claims that are made and reported during the policy period. If you cancel or switch carriers, you can lose protection for past acts unless you maintain the retroactive date or buy tail coverage (extended reporting).
Action item: When switching carriers, match the retro date so you don’t reset coverage to “today.”
Sales reality: insurance helps you close deals
Enterprise customers, landlords, and partners often require specific coverages and limits.
- Common asks: GL $1M/$2M; E&O/Cyber $1–3M; HNOA if you travel to their sites; Umbrella to reach total limits; waiver of subrogation and primary & non-contributory language on certificates.
- COIs (Certificates of Insurance): Choose a broker who can issue these quickly—ideally self-serve via portal—so deals don’t stall.
- Negotiate smartly: If a template demands $10M cyber on day one, counter with staged increases tied to usage or revenue milestones.
How much coverage? A practical starting point
For a typical seed-to-Series A SaaS startup (remote team, B2B contracts, modest PII):
- GL/Property (BOP): $1M/$2M with off-premises gear covered; property limit = replacement value of your equipment.
- Workers’ Comp: Statutory in each employee’s location; employers’ liability often $1M.
- E&O + Cyber: Start at $1M combined; increase to $2–3M as enterprise contracts demand.
- EPLI: $1M once you pass ~10–15 employees, or earlier if you operate in higher-risk jurisdictions.
- D&O: $1–2M around a priced round or when adding outside directors.
If you’re in hardware, fintech, health, or other regulated/data-intensive sectors, increase limits and add specialized forms sooner.
Cost savers and underwriting green flags
- Security basics: MFA, SSO, endpoint protection, immutable/offline backups, and least-privilege access lower cyber premiums.
- Contracts and QA: Standard MSAs, clear SLAs, change-management, and monitoring/logging help E&O pricing.
- HR hygiene: Written anti-harassment and anti-retaliation policies, manager training, and a documented complaint process support EPLI.
- Accurate projections: Carriers audit payroll and revenue; large variances can generate adjustments.
- Bundle smartly: A BOP is often cheaper than standalone GL + property. Combined E&O + cyber can reduce gaps and admin time.
Red flags and common gotchas
- Cyber sublimits: Social engineering and funds-transfer fraud are frequently capped well below the headline limit.
- IP exclusions in E&O: If IP is a credible risk, ensure you’re not fully excluded—or add a rider that meaningfully helps.
- Named-location property policies: Remote teams break these. Ensure worldwide or at least off-premises laptop coverage.
- Wage-and-hour in EPLI: Often excluded or defense-only with a small sublimit—know what you actually have.
- Tail coverage when selling or winding down: Claims-made policies need a tail to protect past acts after closure.
A minimalist roadmap (Month 0 → Month 18)
- Day 0–30 (first hires/lease): BOP (GL + property), Workers’ Comp, Cyber, and E&O if you have any B2B activity.
- Month 3–6 (first enterprise pilot): Confirm E&O/Cyber limits meet contract asks; add HNOA if anyone drives for work; consider EPLI once headcount passes 10.
- Post-seed / pre-Series A: Add D&O if you bring on outside directors or close a priced round; assess umbrella needs; tune cyber/E&O sublimits for social engineering and business interruption.
- Hardware/regulated sectors: Layer in product liability, inland marine, IP/media, and higher limits earlier.
What you can usually skip early (with caveats)
- High-limit umbrellas without contract drivers—buy just enough to win deals.
- Patent-only policies unless counsel flags real exposure you can’t design around.
- Specialty transit/aviation if your operations don’t demand them.
- Niche endorsements your broker can’t explain in plain English.
Re-evaluate after each funding round, major product release, top-tier logo, or geographic expansion—your risk profile evolves as quickly as your roadmap.
The takeaway
You don’t need every policy under the sun. You do need a right-sized core that matches how you actually operate:
- Must-have early: BOP (GL + property), Workers’ Comp, Cyber, and—if B2B—E&O.
- Add as you grow: D&O around a priced round or outside directors; EPLI as headcount climbs; HNOA if anyone drives; umbrella to satisfy big-logo contracts.
- Specialize when needed: Product liability for hardware/consumables; IP/media for content-heavy or patent-dense plays.
Buy deliberately, keep certificates handy, and revisit limits as contracts and headcount scale. That’s startup insurance done right—lean, defensible, and ready to unblock your next deal.