One of the hardest stages in running a business is when you’re just starting to pick pace. A startup business can easily lose valuation because of lawsuits, commercial property damage, and other exposures. While it does not guarantee success, getting startup insurance ensures that you have a countermeasure when such things happen.
Regardless of the industry you decide to pick, general liability insurance is always useful. You need to get $300,000-$1 million worth of coverage from this type of startup business insurance.
You must also consider getting workers' compensation insurance if your startup is employing one or more people.
In case you’re providing installation, repair, cleaning, consulting, and other services, a professional liability policy must be part of your start up insurance program.
And if you’re a tech startup whose work involves the collection and processing of customer data, then it’s a good idea to get cyber liability insurance.
General liability insurance for startups grants a shield against claims for bodily injury or property damage that third parties file. Here are some situations where this insurance is useful:
A customer slips and falls while in the premises of your startup business
An employee causes property damage while repairing or installing a product for a client
Members of the public get injured or sustain property damage due to an accident that happened in the construction site owned by your startup business
So how much money can startups get from general liability insurance? General liability insurance for startups provides $300,000-$2 million you can use to cover these costs:
Reimbursement for property damage
The general liability insurance in startup business insurance programs is underwritten as a broad-form policy. It provides additional protection such as:
$2 million products and completed operations coverage
$1 million advertising injury coverage
$100,000-$300,000 rented premises liability coverage
Non-owned hired auto liability coverage
Your startup business needs to have $1 million general liability insurance to satisfy client contracts and rent equipment or a commercial space.
Professional liability insurance is handy if your startup business generates revenues by providing specialized services to clients. This grants protection when a client files a claim and holds your business liable for:
Violation of good faith
Violation of fair dealing
Breach of contract
Startup businesses can get $250,000-$2 million minimum coverage from professional liability insurance. This insurance money can be used to cover settlements, defense costs, and court judgments every time a claim is filed.
You get professional liability insurance as a claims-made or occurrence form policy. It’s best to get at least $1 million worth of coverage from professional liability insurance.
Professional liability insurance is usually available on its own. However, there are cases where you can only get professional liability insurance if you include general liability insurance in your startup policy bundle.
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Directors and officers liability insurance grants protection when a CEO, marketing officer, operating officer, secretary, and other heads of a startup company commits embezzlement, negligent hiring, fraud, misrepresentation, and other dishonest acts.
You can get $500,000-$5 million from directors and officers liability insurance. Its particular functions can be simplified as follows:
Cover defense costs and indemnification to the aggrieved parties on behalf of your startup business’s directors and officers
Cover the defense costs and settlements your startup company must pay if it gets involved in the mess created by its directors and officers
Reimburse the losses incurred by the directors, officers, and your startup company as a result of the claim filed by aggrieved parties
In most cases, you use D&O insurance for startups if the directors and officers of your company face a claim filed by creditors, regulatory authorities, shareholders, competitors, employees, and customers.
Cyber liability insurance is important if your startup company processes, gathers and collects the data of clients or users. This is the best business insurance for tech startups involved with app development, web development, and other IT services.
Exposures covered by cyber liability insurance are phishing, malware, ransomware, man-in-the-middle attacks, and other forms of data breach.
Cyber liability insurance grants $300,000-$10 million. You can use this insurance money to cover these costs:
The ransom demanded by the cybercriminal
Public relations expenses
Professional services for containing the breach
Credit and fraud monitoring
Your startup can insure supplies, offices, warehouses, condos, and other tangible business assets by buying commercial property insurance.
Startup businesses use commercial property insurance to recover losses if an office, warehouse, condo, or any other building gets damaged or lost because of:
Commercial property insurance also grants coverage if stocks, inventory, supplies, or equipment get damaged or lost while inside a building owned by your startup business.
Sometimes, this insurance is designed comprehensively that it will also provide these additional perks:
$5,000-$10,000 for credit card slip or loss
$1,500-$2,000 for lock and key damage or loss
$5,000-$10,000 for accounts receivable
$1,500-$5,000 for any damage to water, electricity, and other utility services
Your startup business is very vulnerable to income loss as caused by temporary suspension of its operations. This is why it’s good to get business interruption insurance.
Business interruption insurance helps if you need to close your startup business temporarily because of:
Other covered perils
It’s easy to understand how this insurance works. While your startup company isn’t generating income, business interruption insurance supplements lost revenues and provides the money you can use to cover employee payroll, utility bills, mortgage, lease, rent, and other operational costs.
Business interruption insurance grants coverage for 30 days or 360 days if you decide to get an endorsement.
Commercial property and general liability insurance are the best insurance for startups. In connection, you can bundle them in a business owner’s policy.
A business owner’s policy saves you the trouble of buying general liability and commercial property insurance separately. This is the best insurance for startup company looking for quick and comprehensive coverage.
It might also offer other coverages such as business interruption insurance, employee dishonesty insurance, cyber liability insurance, and more.
As we said earlier, you need to consider getting workers compensation insurance if your startup business has one or more full-time and part-time employees.
Workers' compensation insurance is required by law. Authorities can issue a penalty if your startup business doesn’t comply.
The coverage of workers' compensation insurance applies when a part-time or full-time employee sustains a work-related injury or disease. This will take care of the following costs on your behalf:
EMT service fees
First aid treatment, surgery, and other expenses for employee’s medical treatment
Reimbursement for lost wages
Rehabilitation and retraining
Funeral expenses and allowance to dependents in case of death
Your startup business’s workers' compensation insurance doesn’t automatically cover independent contractors. Name independent contractors as additional insureds if you wish to include them in your worker's compensation insurance. Doing this might come at an additional cost.
Your startup can add an employer’s liability insurance to workers' compensation insurance.
Sometimes, workers' compensation insurance can automatically have employer’s liability insurance.
Employer’s liability insurance protects your startup business if an employee holds it liable for negligence because of a work-related injury or disease.
It grants $100,000-$5 million you can use to cover settlements, defense costs, and court judgments.
It’s best to get a $1 million-$2 million employer’s liability insurance for your startup business. Doing so provides protection without compromising your budget.
Occupational injuries or diseases aren’t the only reasons for an employee to hold your startup company liable. The thing is employer’s liability insurance limits itself to such exposure.
You can also get employment practices liability insurance to cover claims that employer’s liability insurance doesn’t cover, such as:
Failure to promote
Other violations of employee rights
Employment practices liability insurance provides $25,000-$1 million to startup businesses. This is only a minimum, and you can get more, provided that your startup business has a good profile.
Commercial auto insurance can be included in your insurance program if your startup business is a trucking company, food delivery company, moving company, and other ventures that utilize commercial vehicles.
So what does commercial auto insurance do for your startup business? Here’s a summary of its functions:
Provide $25,000-$1 million worth of coverage if your commercial vehicle inflicted third parties with bodily injuries
Provide $15,000-$1 million worth of coverage if your commercial vehicle caused property damage
Pay parts repair or replacement expenses if your startup’s commercial vehicle got damaged because of a collision, fire, theft , vandalism, and other covered perils
Provide $25,000-$50,000 for the medical treatment of the driver and passengers if your startup’s commercial vehicle got involved in an accident that an uninsured/underinsured driver caused
Reimburse vehicle rental expenses by up to $30-$90 per day, capped at $900-$1,500 max
Commercial auto insurance isn’t enough if your startup is in the trucking and logistics industry. You might hire or borrow a trailer, and it’s important to get trailer interchange insurance.
Trailer interchange insurance takes covers the repair or replacement of hired or borrowed trailers under a trailer interchange agreement, which got damaged or lost because of:
Each type of insurance for startups has its own pricing. And so, here’s a table outlining the startup insurance costs:
|Cost per Month||Cost per Year||Deductible|
|General liability insurance||$28||$336||$0-$500|
|Professional liability insurance||$34||$408||$1,000-$1,500|
|Directors and officers liability insurance||$40||$480||$1,000|
|Cyber liability insurance||$89||$1,068||$2,000|
|Commercial auto insurance||$56||$672||$1,000|
|Commercial property insurance||$39||$468||$1,500|
|Workers compensation insurance||$90||$1,080||$2,000|
As shown above, expect to pay $28 per month or $336 per year for a $1 million general liability insurance. This is an estimate of the business insurance cost for startup with 5 employees and $500,000-$750,000 revenue per year.
Startup business insurance costs vary and depend on factors such as location, payroll, business history, claims history, annual revenue, type of services or products offered, and more.
Premiums can be also cheap or expensive depending on which insurance company you decide to work with. Here’s another table showing the cost of the recommended carriers for a comprehensive coverage:
|Cost per Month||Cost per Year||Best for|
|NEXT||$24||$288||Best overall; Fastest general liability insurance for startup businesses|
|CoverWallet||$27||$324||Startup insurance quotes comparison online|
|Tivly||$29||$348||Comparing startup insurance quotes over the phone|
|Thimble||$30||$360||On-demand startup insurance policies|
|Hiscox||$33||$396||General liability insurance with worldwide coverage for startups|
|Embroker||$40||$480||Small tech startups who specialize in providing a product or service to a limited audience|
|Simply Business||$42||$504||Business equipment insurance for startups|
Get all the best quotes from leading providers in a click of a button!
Let’s take a look at the pros, cons, and price of the $1 million general liability coverage of the best startup insurance companies.
Get an online proof of insurance and send as a text message, email, or social media post
Fastest general liability insurance for startups
Great customer service and reputation
Issues an online proof of insurance instantly
Outstanding value for money
Bundle two or more insurance policies and get a 10% discount
Couldn’t find any
NEXT offers three levels of coverage for startup companies-basic, premiere, and deluxe. Each is tailored to your business’s unique needs.
For example, if you don’t need a lot of protection, then the basic coverage works best because it only offers a general liability policy. On the flip side, get the deluxe coverage for a comprehensive shield because it offers general liability, professional liability, workers compensation, and other business insurance policies.
Best for: Best overall; Fastest general liability insurance for startup businesses
Average cost: $24 per month
Our rating: 10/10
Partnered with AON, a multinational firm with an excellent reputation.
Build your own policy based on your startup’s unique needs.
Excellent online startup insurance quotes comparison
Coverwallet is online-only, which means that getting in touch may take a little bit longer than with a traditional insurer
Coverwallet is owned by the large multinational insurance conglomerate AON, which provides insurance policies for different businesses.
Policies you can get from CoverWallet are general liability insurance, professional liability insurance, commercial property insurance, workers compensation insurance, commercial auto insurance, and more.
Best for: Startup insurance quotes comparison online
Average cost: $27 per month
Our rating: 10/10
Responsive customer service
A partner of many reputable insurance companies
Call and compare quotes over the phone
You need to call to get a quote
Tivly (formerly CommercialInsurance.NET) sells general liability insurance, workers compensation insurance, professional liability insurance, bonds, and other insurance products for startups in the fitness industry, design, trucking, and retail industries. Call Tivly now to compare startup insurance quotes over the phone.
Best for: Comparing startup insurance quotes over the phone
Average cost: $29 per month
Our rating: 9/10
Quick to issue an estimate of your rate
Sells a short-term general liability insurance
Choose limits and deductibles
You can’t reach customer service by calling
Thimble is a great option to get startup business insurance online. Thimble specializes in providing small businesses with on demand general liability insurance policies that grant protection for hours, weeks, days, or months.
Best for: On-demand startup insurance policies
Average cost: $30 per month
Our rating: 8/10
Free claims resources
14-day money-back guarantee
Poor reviews on Better Business Bureau
Hiscox offers general liability insurance, professional liability insurance, cyber liability insurance, and business owner’s policy to startup businesses. This company also sells short-term general liability insurance, which is underwritten by Thimble.
Your general liability insurance from Hiscox has a $300,000-$2 million per occurrence limit. Cyber liability insurance, on the other hand, only has a $300,000 per occurrence limit. Finally, this company’s professional liability insurance grants $1 million-$2 million worth of coverage.
Best for: General liability insurance with worldwide coverage for startups
Average cost: $33 per month
Our rating: 8/10
Cheap insurance rates due to its online-only business model
Startup package with a specialization in tech startups
Great customer service ratings
No mobile app
Founded by Matt Miller in 2017, Embroker Insurance is one of the few “digitally-native” insurance companies on the market. This means that they don't have any physical offices and handle all of their policies and claims online. This significantly reduces the average cost of insurance paid by policyholders.
Embroker specializes in providing small business insurance and even has a startup policy pre-packaged and ready to go. It includes D&O, employment liability, fiduciary liability, and professional liability coverage with a specialization in tech and cyber-related claims.
Best for: Small tech startups who specialize in providing a product or service to a limited audience
Average cost: $40 per month
Our rating: 8/10
Issues a gift card you can use to purchase insurance
A partner of AXA, Zurich, Hiscox, and other reputable insurance companies
Has a dedicated team of specialists that grants help if you get dual insured
Not primarily based in the USA
Simply Business is an insurance broker that’s based in the UK. However, it has an office in Boston. Your startup company can get professional liability, general liability, and other business insurance from this company. Note that Simply Business is a partner of Tivly.
Best for: Business equipment insurance for startups
Average cost: $42 per month
Our rating: 8/10
Lonnie Bell Insuranker
Policy Type: Business Insurance
Company name: Employers Insurance
Use anyone except Employers. Period. They are non-transparent and shameful. After I complained long enough to warrant a call from a supervisor, the supervisor called back from a PRIVATE NUMBER (no caller ID), left a message that they are not reversing their decision (without any communication with me), and failed to leave a phone number for me to call back. She was hiding! They also fact find via email and phone calls, which is terrific for speed and communication. However, after setting a precedence of email or phone calls, they send time sensitive information via email, without any heads up... they are hoping you miss it and forfeit via expiration. Evil policies. Go elsewhere.
This place is an absolute joke of a company and should be ashamed of the way they conduct business. I was hurt on the job at the end of July and it took them just shy of 7 weeks to issue out a paycheck to me. Yes the amount was back dated but still. Not many have the luxury of not receiving a paycheck for almost 2 months. To top it all off, the original adjuster marked me down for the wrong state which caused a problem from the get go, I've had 3 different adjusters now since each one can't seem to figure out the simplicity of my claim. All my paperwork which includes, my job, house, and drs visits all are from the same state and city but yet some how I have been filed under a completely different state 1500 miles away. They do not answer your phone calls or emails no matter how many you leave. I've had to escalate my frustrations to the supervisors of each of these individuals in order to even get some kind of response. I've had more communication and information given to me about my claim from the customer service representatives then the actual adjusters.......... please tell me how that works?! A serious overhaul needs to happen here in order to serve your clients the way they deserve to be taken care of. 10/10 do not recommend this company to a single soul on earth
I have never had the displeasure of working with a more incompetent and disrespectful person in my life. I’m an injured worker and the adjuster that was assigned to my case was named Carrie Furgeson. In the past 6 weeks that I’ve been injured and out of work I have only been able to get ahold of her twice, not for lack of trying. I have left countless voicemails, countless emails, and she ignores them all. When I am finally able to get ahold of her I’m greeted with terrible customer service. She is rude, she talks over me and I’m hardly able to get a word in edgewise. She spelled my name wrong on my documents even after I spelled it for her properly countless times, this caused a whole new issue with my bank. I have bill collectors from the hospital calling me demanding payment and Carrie Furgeson won’t do a single thing to help, or to get them paid. All of my documentation is in Colorado, my job is in Colorado, my address is in Colorado, all my Dr offices and appointments have been in Colorado and Carrie still managed to hold my claim because she wasn’t sure what state she needed to file it under. It’s been 6 weeks since my Injury and my company still hasn’t received the wage paperwork to fill out so they can get me my correct wages. When she’s not ignoring me she’s answering my questions with “I don’t know” well I don’t know how she got this job, because apparently she doesn’t know anything about it. She is a disgusting morose individual inside and out and I genuinely wish her the worst in all of her future endeavors. I highly recommend you don’t use this company. Please if you are a business owner and your looking into this company please don’t use them. I’m sure they have the cheapest payment and that’s why companies use them in the first place, but you will be doing your employees a grave disservice by forcing them to venture into this absolute dumpster fire of a company. I would rate 0/5 if possible but 1 was the lowest I was allowed.
Their general liability insurance purchase process is simply the best online experience I've ever had in my life!
As long as they cover your line of business, you're literally covered! best rates, best coverage, best online experience, best professionals, can't be happier that I chose them!