Recommended types of business insurance for startups
General liability insurance
This policy protects startups from the basic risks of working with clients and customers, such as slip-and-fall injuries. It may be required by a client contract or a commercial lease.
- Accidental client injuries
- Accidental damage to client property
- Libel, defamation, and copyright lawsuits
Errors and omissions insurance
E&O covers the cost of lawsuits filed by clients or customers that accuse your startup of an error or oversight. It's also called professional liability insurance.
- Undelivered services
- Errors in your work
- Professional negligence
Cyber liability insurance
A cyber liability policy helps startups recover from cyberattacks and data breaches. It’s strongly recommended for any business that handles credit card numbers or other sensitive data.
- Data breach lawsuits
- Customer notification costs
- Fraud monitoring services
Business owner's policy
A BOP combines two types of insurance at a discount: general liability coverage and commercial property insurance. Small low-risk startups are typically eligible.
- Client injuries and property damage
- Business property damage and theft
- Business interruption coverage
Workers' comp insurance
Most states require startups with employees to purchase workers' compensation insurance. It also protects sole proprietors from work-related medical expenses that health insurance could deny.
- Medical bills for work injuries
- Disability benefits
- Legal fees from employee injuries
Commercial auto insurance
This policy helps pay for accidents involving a vehicle owned by your startup. State laws usually require it for business-owned vehicles.
- Property damage caused by your vehicle
- Bodily injuries in an accident
- Vehicle theft and vandalism
Employment practices liability insurance
EPLI insurance coverage helps pay for legal expenses when an employee sues over discrimination, harassment, wrongful termination, or similar employment issues.
- Wrongful termination claims
- Discrimination claims
- Mismanagement allegations
Directors and officers insurance
D&O insurance covers lawsuits related to decisions made by directors, officers, and board members on behalf of your company, including lawsuits from dissatisfied investors.
- Investor lawsuits over lack of transparency
- Accusations of mismanaged funds
- Failure to comply with regulations
Professional liability insurance
This policy, also called errors and omissions insurance (E&O), protects small businesses that provide professional services or advice. It covers lawsuits related to work performance.
- Work mistakes and oversights
- Professional negligence lawsuits
- Late or incomplete work
How much does startup business insurance cost?
From our customer data, here's a quick look at the average costs of common TechInsurance policies:
General liability: $42 per month
Tech E&O: $61 per month
Workers' compensation: $45 per month
View more small business insurance costs.
Start a free application to see how much insurance will cost for your startup.
Which policies are required for startups?
Sometimes a startup needs insurance to work with a client or comply with the law. When you're insured, your clients gain peace of mind knowing that your business can handle a lawsuit, so any issues won't escalate to affect them. You can also ask clients to include you as an additional insured on their policy.
You may need a commercial insurance policy to:
Get funding. Some venture capital firms require startups to have D&O coverage before receiving funding.
Work with a certain client. Clients might require you to carry E&O insurance or a fidelity bond to avoid financial losses.
Sign a lease. Your landlord may require a certificate of insurance as proof of general liability insurance or commercial property insurance, which you can bundle in a business owner's policy.
Comply with the law. Vehicles registered to a startup must be covered by commercial auto insurance. If you use your personal car for business, a hired and non-owned auto insurance (HNOA) policy may also be an option for you. As soon as you hire your first employee, you'll likely need workers' compensation to comply with the laws in your state.
Which policies does your state require for tech companies?
Bundle insurance policies to save money
Startups can save money on insurance with two packages common in the IT industry.
A BOP combines commercial property insurance and general liability insurance.
A general liability insurance policy is the coverage that most small business owners purchase first. It covers basic third-party (non-employee) liability claims, including bodily injury and property damage. The policy is especially beneficial for startups that invite the public into an office or storefront, handle delicate client equipment, or have an active social media presence.
Commercial property insurance is critical for protecting your work equipment and your building, if you own it. This policy is valuable even if you’re renting an office space, as your landlord’s policy won’t cover your company’s belongings.
Tech E&O combines E&O and cyber liability insurance.
This policy is crucial for startups in the tech industry and professional services, as it covers the cost of lawsuits over the quality of your work, including any security recommendations. It bundles E&O insurance with both forms of cyber liability insurance:
First-party cyber liability insurance helps your business recover from a data breach or cyberattack. It covers expenses like the cost of credit monitoring services, crisis management, and cybersecurity incident investigations.
Thirty-party cyber liability insurance protects tech companies if a client sues you for failing to prevent a data breach or cyberattack at their business. If you find yourself in this kind of dispute, this covers your attorney's fees, settlement, court-ordered judgments, and other legal costs.
Chat with an insurance agent to find out more about bundles and discounts.
Get free quotes for startup insurance
TechInsurance helps IT and tech business owners compare business insurance quotes with one easy online application. Start an application today to find the right policy at an affordable price, and get a certificate of insurance for your startup.