Insurance for Startups

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How Startups and Insurance Connect:

For most businesses today, including startups, business insurance should be considered a mandatory requirement. It can be hard to know what insurance coverage you need when you're launching a business.

Law requires certain types of insurance, but other options can offer additional coverage, whether it’s for business associates, employees, or potential investors.

Ultimately, insurance, whether it’s for a small startup or a large corporation, is necessary to protect your employees and encourage investment in the business you have worked hard to create.

Finding the right insurance types for your startup may seem daunting, but we are here to help.

Read on to learn more about the insurance your business needs.

Who Needs Startup Insurance?

Startups are temporary enterprises working to deliver new, innovative products or services in a variety of industries, from art to technology. Despite being enterprises, startups still need to be covered by insurance while they work towards developing scalable business models and becoming full-fledged companies.

What Insurance Does a Startup Need?

There are essential business insurance coverages you may need to consider as a startup. Depending on the nature of your business and its structure, the types of imperative insurance may vary.

General Liability Insurance

General Liability Will Offer Two Types of Protection

General liability insurance — sometimes referred to as “slip and fall” insurance — is the most basic type of insurance and can protect your startup from small accidents and other on-premises mishaps. As a startup or small business, you will need to have some form of general liability insurance to safeguard your business and, by extension, your livelihood.

  • Property Damage: Will provide your business with coverage if you or one of your employees damage someone else’s property. This includes the building or premises you are working on.
  • Bodily Injury: Will provide your business with coverage if you or one of your employees injure or inadvertently harm the third party while working. This insurance type will take care of all medical care for the injured party and will also cover your legal fees if legal proceedings are sought against your company.

General liability insurance can also go beyond simple accidents and can include coverage for actions by your team outside of the office. It can also protect your startup if an accident occurs through the use of your products by customers.

You’ll Need This When...

You first start your business. Policies are usually inexpensive for startups so general liability policies should not be considered optional.

For Example...

If you are working with a client and something falls on them and seriously injures them, General Liability Insurance would cover the medical expenses and legal fees that result from that injury.

Property Insurance

Making Sure You Have Your Goods Covered

Property insurance will cover your startup’s physical assets in the event of loss or damage. A good policy will include property, such as buildings, equipment, furniture, computers, and other inventory as well as less-obvious protections such as virtual records. Your startup should be able to get a policy that covers all assets regardless of whether they are owned or have been leased. Coverage can also extend to personal property belonging to others that are in your business’ care.

This type of policy will provide for:

  • The repair or replacement of your covered losses in the event of human-made disasters, such as theft and fire, and natural ones, such as earthquakes and hurricanes (Flood insurance requires a separate policy!)
  • The replacement of covered physical assets in the event of loss or damage.

Many property insurance policies will also cover business interruption. For example, if, following an unexpected event your operations need to be suspended, this insurance would compensate for the loss of income and could assist you in fulfilling other financial obligations such as payroll.

You’ll Need This When You…

Start your business. Property insurance policy is also typically a requirement if your startup is carrying a loan from a bank or other financial institution. Furthermore, angel investors and business partners may require your startup to have property coverage.

For Example...

If your startup property is burgled or vandalized, property insurance will cover the replacement of your included items.

Workers Compensation Insurance

Making Sure Your People Are Taken Care Of

Workers Compensation can cover injuries to your employees while on the job, whether at the physical site of the job or elsewhere. Workers Compensation can also cover lost wages and medical treatment if an employee suffers a work-related injury or illness and is unable to work. It will also reimburse workers for lost wages until they can go back to work. As an employer, this is ideal, as it will protect you from employee lawsuits.

You’ll Need This When You...

Have employees on the company payroll. The laws differ from state to state, but usually, coverage to protect the welfare of your startup team is required by law. Regardless of your state’s laws, Workers Compensation Insurance is favorable to have as an employee-related lawsuit could harm your reputation and put your business at risk.

For Example...

A programmer at your startup develops carpal tunnel because of the amount of time she is spending at her computer writing code. Workers compensation can help cover her medical treatment and lost wages so you won’t have to.

Other Insurance Types to Consider

The type of insurance you need for your startup will depend on what stage your business is in. Check out our handy infographic to understand what we mean: coverwallet-insurances-types

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How Much Does Insurance Cost?

Insurance costs often depend on several different factors including location, claim history, business size, and type. You will be able to get an accurate approximation of cost by getting an insurance quote that pertains specifically to the needs and nature of your business.

Business Insurance

Running a business is challenging enough without having to worry about lawsuits, employee injuries or property damage. Having the right insurance gives you the peace of mind to focus on what matters - running your business.

The coverage you need depends on the type of business you run. A restaurant owner needs to be covered against customers possibly getting food poisoning while an accountant needs to be covered against calculation errors. CoverWallet's intelligent assessment system will identify the insurance you need based on your specific business, get you a policy that fits your budget, and do it all in less time than you think.

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