What insurance do startups need?


There are many different types of startups, but no matter what you do it is very likely you will be needing some sort of insurance. It is also true, that the insurance you need largely depends on your size. After all, a recently founded startup still working its way out of a garage its not the same as  a newly born unicorn looking to make the front page of the Financial Times.

Read on for an overview of what you might need or visit www.coverwallet.com to get personalized advice

COMMERCIAL PROPERTY POLICY AND COMMERCIAL GENERAL LIABILITY INSURANCE POLICY

  • What does it cover? General Liability provides protection against bodily injury and property damage claims for which a business becomes legally liable. Commercial Property protects your property within your office. This policy can also cover the loss of use of the premises in the event of a covered loss such as a fire. These types of insurance are usually packaged into Businessowners Property (BOP)
  • When do you have to have it? When you start a business but at minimum when office space is leased or when this insurance is required by contract.
  • Approximate Cost $500-$2,500+. It takes 1-2 weeks to get it in place.

ERRORS & OMISSIONS (E & O)

  • What does it cover? Protects you against the financial loss of a third party arising from failure of the insured’s product or service to perform as intended or expected. It also protects financial loss of a third party arising from an act, error, or omission committed in the course of the policy-holder’s performance of services for another.
  • When do you have to have it? Once you launch a product or when a client requests it.
  • What are the costs? $1,500- 3,000+; Usually depends on type of start-up and revenues.

CYBER INSURANCE

  • What does it cover? Cyberinsurance covers the cost of dealing with a data breach. For example in the US, if a startup’s data is breached, it has to notify all the affected users.
  • When do you have to have it? Once the startup has client data.
  • What are the costs? $1,000-5,000+; Premiums are based on various factors including revenue, and IT security. It can be obtained immediately calling CoverWallet.com at (646) 844-9933

WORKERS’ COMPENSATION

  • What does it cover? Provides wage replacement and medical benefits to employees injured in the course of employment. The injury must have its origin at work to be considered a Workers’ Compensation claim.
  • When do you have to have it? Once the first employee is hired. Founders do not have to acquire Workers Compensation insurance for themselves.
  • What are the costs? It depends on payroll and State legislation. It usually costs 1,5%-3% of payroll, so around $1,000-$2,000 for a few office employees. It takes 2-3 weeks to get it in place.

DIRECTORS & OFFICERS LIABILITY INSURANCE

  • What does it cover? Provides coverage for a loss as a result of a legal action brought for alleged wrongful acts in their capacity as directors and officers of the startup
  • When do you have to have it? Usually when you close your Series A funding.
  • What are the costs? $1,000-$3,000+. It usually takes ca. 2 weeks.

KEY MAN INSURANCE

  • What does it cover? Helps with cost to replace expertise after an essential founder’s death.
  • When do you have to have it? Once you start making profit, have investors or want to sustain continuation of the startup in case of a founders death. Can be required by investors.
  • What are the costs? $250+ per year. It usually takes ca. 3 weeks.

EMPLOYMENT PRACTICES LIABILITY

  • What does it cover? Protects your startup against claims by workers when their legal rights as employees of the startup have been violated (e.g., Sexual harassment, discrimination, wrongful termination, etc.)
  • When do you have to have it? Once your startup has several employees.
  • What are the costs? $1,500-$3,500+. It takes ca. 1-2 weeks to get it in place.

 

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