Should You Get Business Insurance for Your Startup?
 Written by Derek San Filippo Derek San FilippoDerek has over 10 years of experience writing web content for a variety of online publications. His pieces range from fi... Read more |  Edited by Fran MajidiFran MajidiFran Majidi manages content on SmartFinancial's website. She's had nearly a decade's worth of experience writing about i... Read more |
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Startup business insurance isn’t necessarily required as every state will have different parameters surrounding what insurance coverage is mandated for companies. The only exception is workers’ compensation insurance, which is required for any startup (or any business) that employs their state’s minimum number of employees. Coverage and costs will vary based on the type of startup, its size and industry, among other factors.
Read below to see what insurance types are available for your startup along with pricing and where you can obtain coverage.
What Is Startup Business Insurance?
Startup business insurance provides financial protection for newly formed businesses, usually covering liability claims related to your business, workers, products or services. However, “startup business insurance” isn’t an actual product sold among commercial insurance carriers. Instead, startups can choose from a variety of coverages, such as liability, commercial property and business interruption, that will best suit their business needs. Therefore, policies vary in cost and scope depending on the type of startup.
Why Is It Important for Your Startup To Have Insurance?
Commercial insurance protects your company in the event your company suffers liability or physical property losses. This can include claims related to customer injuries or you need financial recompense if something happens to business inventory or key equipment.
Properly insuring your business and assets can also help with investor relations, attracting talent and generating solid customer relations.
- Investor relations: Having the proper insurance coverage may boost a company's chances of finding the right funding partners, which typically helps investors throughout the diligence phase.
- Attracting talent: New talent will be looking for good pay, as well as benefits. Having health insurance as well as workers’ compensation can help your startup attract the best employee candidates and create long-term retention.
- Generating solid customer relations: B2B (business-to-business) customers will often stipulate insurance requirements along with proof of insurance before any contracts are signed.
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What Is Covered by Startup Insurance and How Much Does It Cost?
Startup insurance can include a wide swath of solutions, with costs starting as low as $25 per month and going up to $2,500 and up depending on the coverage. The table below shows the various coverages startups can consider both now and in the future plus average monthly rates provided by Next Insurance, The Hartford, AdvisorSmith, Embroker and Fit Small Business.
|
Coverage |
Description |
Average Monthly Rate |
|---|---|---|
|
Business Owners Policy (BOP) |
Bundled policy that includes general liability coverage, commercial property coverage and business interruption insurance. |
$261 |
|
General Liability Insurance |
Protects the business from bodily injury or property damage caused by you or an employee. |
$25 - $100 |
|
Professional Liability Insurance (Errors and Omissions) |
Company will be covered for claims of negligence, misrepresentation, inaccurate advice and personal injuries, such as libel or slander. |
$25 - $100 |
|
Provides benefits to employees that can help them recover from a work-related illness or injury. |
$70 |
|
|
Provides protection if an employee is at fault for hurting someone or for damaging another’s property while driving a company car. Employees will be protected if they are injured while driving a company vehicle. |
$75 - $200 |
|
|
Inland Marine Insurance |
Equipment or tools owned by your business will be protected while in transit between job sites. |
$62 |
|
Office space will be covered if it is damaged or destroyed by a covered event. Protection also includes personal property at the office space, inventory, furniture, outdoor landscaping and accounts receivable. |
$18 - $250 |
|
|
Directors & Officers Insurance |
Protects the personal assets of company directors and officers if they are sued while serving as a director or officer. |
$416 - $833 |
|
Employment Practices Liability Insurance |
Covers your legal defense costs as well as settlements or judgments if you’re sued for wrongful termination, employment-related harassment or discrimination by a current or former employee. |
$800 - $5,000 |
|
Cyber Liability Insurance |
Provides protection in the event of a data breach or software outage, covering credit card information, Social Security numbers and any other personal online information. |
$132 |
|
Fiduciary Liability Insurance |
Protects your company and employees if someone responsible for benefits such as health insurance, 401(k)s and stock options makes a mistake. |
$500 - $2,500 |
|
Key Person Insurance |
A life insurance policy that pays a business upon the death of an individual considered critical to the company, instead of that person's beneficiaries. |
$16 - $126 |
|
Commercial Crime Insurance |
Reimburses your company if securities, money or any other tangible property is lost because of criminal acts. |
$113 - $187 |
|
Commercial Umbrella Insurance |
Increases the limits of your existing liability coverage so you can cover expensive claims. |
$150 - $300 |
Note: Pricing will vary by insurance company, business and location. The numbers above should only be used for comparative purposes.
Companies Offering Startup Business Insurance
Startups have several options when looking for insurance, including some of the more well-known carriers in the country along with companies that specialize in business insurance. See below which providers have commercial insurance along with the types of coverage they offer.
|
Company |
Description |
Types of Insurance |
|---|---|---|
|
Offers commercial insurance that can be broken down either by coverage type or by industry, making getting protection quick and easy. |
|
|
|
Offers expertise from over 200 years of experience along with being rated as one of the world’s most ethical companies. |
|
|
|
Offers coverage for several business subsets, including habitational insurance, lesser risk insurance and small business insurance |
|
|
|
Offers commercial insurance that is broken down between small and large business entities. The size of the business can then be broken down by industry, making getting protection quick and easy. |
|
|
|
Offers commercial insurance that can be broken down either by coverage type or by industry, making getting protection quick and easy. |
|
|
|
Offers commercial insurance broken down into two categories; business owners policy (BOP) and commercial auto. |
|
|
|
Hiscox |
Offers expertise from over 100 years of experience along with having a Feefo rating of 4.8/5. |
|
|
Offers expertise from over 100 years of experience with insurance as well as banking solutions. |
|
|
|
CNA |
Offers commercial insurance by industry or type of coverage. Specializes in insurance products for small and mid-size businesses as well as international solutions. |
|
|
Embroker |
Offers commercial insurance for startups, tech companies and law firms. Has recently added solutions tailored to aviation and aerospace and cannabis companies. |
|
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Key Takeaways
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SmartFinancial can help you with all your startup business insurance needs. Enter your zip code below or call 855.214.2291 and we’ll send you your free commercial insurance quotes.
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Derek has over 10 years of experience writing web content for a variety of online publications. His pieces range from finances and entertainment to religion and philosophy. For the past three years, Derek has focused on writing financial literacy articles for credit unions throughout the country. He prides himself on being able to take complex topics and make them accessible to the general public.
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