💼 Protect your dreams: No unexpected costs = less stress for you. Liability insurance shields your business from claims, keeping your personal and business assets secure.
🚀 Unlock new opportunities: From new partnerships to hiring employees, the right insurance helps you say “yes” to growth without hesitation.
📜 Ensure compliance: Securing insurance now means you’re ready to provide proof of insurance or add additional insureds when necessary, keeping you compliant.
🤝 Enhance your credibility: Insurance demonstrates your professionalism, showing partners, clients, and customers that you’re a reliable business ready for success.
⭐ Gain peace of mind: Homeowners’ insurance doesn’t cover business-related claims. With the right policy, you can relax knowing your business is protected!
Starting a company comes with a lot of to-dos, and getting insurance is probably not as glamorous as designing a logo or moodboarding your aesthetic. It’s just as important, though.
You built this dream, now it’s time to protect it.
What Kind of Insurance Do Startups Need?
Every startup should get business liability insurance. These customizable policies offer a variety of coverages (some included, some optional for an additional price). Below are the most essential types of insurance for startups:
✅ General Liability Insurance: This is the base coverage included in most business insurance policies. It covers many common claims, like injuries and damages to third parties.
Typically covers:
✔️ Bodily injury, like slips, trips, and falls
✔️ Damage to someone else’s belongings
✔️ Damage to rented premises, including fires
✔️ Advertising injury, like libel or slander
✅ Professional Liability Insurance: Also called Error & Omissions (E&O), this protects your business from claims caused by mistakes or negligence in the services or advice you provide.
Typically covers:
✔️ Legal defense costs
✔️ Mistakes or omissions in service
✔️ Inaccurate or misleading advice
✔️ Failure to meet contractual obligations
✅ Product Liability Insurance: This coverage is crucial if you’re selling goods, consumables, or products. It’s designed to cover the cost of damage or injury caused by your products.
Typically covers:
✔️ Manufacturing defects
✔️ Design flaws
✔️ Product mislabeling
✔️ Customer injuries from product use
✅ Workers’ Compensation Insurance: This is a no-fault coverage required in most states for startups with employees. It can cover expenses for work-related injuries.
Typically covers:
✔️ Disability benefits
✔️ Medical bills from work injuries
✔️ Lost wages while an employee recovers
✔️ Death benefits in severe cases
✅ Equipment Coverage (Inland Marine): This coverage protects your movable equipment and tools against theft or damage, whether in transit, in storage, or on site.
Typically covers:
✔️ Damage from vandalism or theft
✔️ Stolen gear or equipment
✔️ Inventory damage during transit
✔️ Damage from unexpected weather
✅ Liquor Liability Insurance: If you serve alcohol, this covers injuries or damages related to the service of alcohol, offering protection for bartenders, caterers, and other vendors.
Typically covers:
✔️ Injuries or damages caused by intoxicated guests
✔️ Alcohol-related accidents after an event
✔️ Legal defense for claims
✅ Cyber Liability Insurance: This helps protect your business if you’re the victim of a cyber attack, covering the costs of data breaches and related damages.
Typically covers:
✔️ Data breach recovery
✔️ Cyber extortion or ransomware
✔️ Legal fees from data loss
✅ Surety Bonds: This is a three-party agreement that guarantees your business will meet contractual obligations and fulfill business promises.
Typically covers:
✔️ Compliance with industry regulations
✔️ Financial protection for clients
✔️ Assurance of work completion as agreed
✅ Commercial Property Insurance: This coverage protects your business’s physical property, including your building, equipment, and inventory, from damage or loss.
Typically covers:
✔️ Damage from fire or explosions
✔️ Loss from windstorms or natural disasters
✔️ Vandalism and theft
The Most Essential Insurance for a Startup Business
I know there are a lot of coverage types to choose from, which can make it hard to know which ones are right for you. It’s always best to start with general liability insurance and go from there. It’s important to customize a policy to your startup.
⭐ General Liability Insurance
This is the most popular coverage that most small businesses need. It can cover you for the most common claims and allows you to add additional coverage as needed.
Do Startups Really Need Business Insurance?
Instead of asking, “Do I really need insurance?” ask yourself, “Can I afford to pay for a legal battle when something happens?”
Claims and lawsuits can be costly for any business. In a world where legal action is always a possibility, it’s always best to have a backup plan for legal troubles. In fact, 43% of small businesses are threatened with lawsuits each year, draining their time and resources to defend themselves (even if they’re not at fault).
Small businesses are also prime targets for scammers and cyberattacks. Without a dedicated IT team or robust cybersecurity measures, your startup is more vulnerable to cybercriminals than you might realize.
Don’t lose what you’ve worked so hard to build. By insuring your startup, you’re protecting both your business and your dreams!
Continue reading to learn more, or get covered today by selecting your industry below.
Startup Business Insurance Game Plan
Every startup is different, so there’s no one-size-fits-all approach to insurance. That’s where we come in: Insurance Canopy customizes policies to fit the unique needs of your business, so you’re fully covered from day one.
I know it can be tricky to decide exactly what kind and how much coverage you need, so check out this quick breakdown of how to evaluate your startup’s insurance needs.
1. Assess Your Risks
- Identify specific risks based on your industry (such as injuries, product defects, or data breaches)
- Consider your business size and structure, like whether you have employees, property, or products that need extra protection
2. Determine Necessary Coverage
- General Liability: Covers customer injuries or property damage
- Professional Liability (E&O): Protects against mistakes or advice you give
- Product Liability: Covers damage or injury caused by your products
- Workers’ Compensation: Covers employee injuries on the job
- Cyber Liability: Safeguards your business against data breaches and cyberattacks
- Commercial Property: Protects your physical assets, including inventory and equipment
3. Understand Your Coverage Needs
- Consider both your immediate and long-term needs
- Make sure you’re compliant with state laws and industry regulations
- Add optional coverages (like Inland Marine Insurance) as your business grows
4. Set Your Budget
- Get quotes from multiple insurers to compare rates
- Choose a payment plan that fits your budget (think monthly or annual payments)
5. Pick the Right Insurance Provider
- Big-name insurers you use for home or auto coverage may not specialize in small businesses, sometimes offering pricier policies with less flexibility
- Look to companies specializing in small business insurance (like Insurance Canopy!)
- Work with an agent who can help you find the best coverage for your business needs
6. Track Your Coverage
- Keep track of policy details, renewal dates, and what’s covered
- As your business grows, update your coverage to reflect any changes (e.g., new employees, expanded operations)
7. Review Annually
- Set a reminder to review your coverage every year
- Stay on top of changes in laws and regulations that might affect your business
Pro Tip: Plan for Growth
Treat business insurance as an investment in your startup’s future. Get the right coverage now to protect your business as you scale!
FAQs About Business Insurance for Startups
What Insurance is Legally Required for Startups?
Insurance legally required for startups includes:
- Workers’ compensation for startups with employees
- Liquor liability for startups selling or distributing alcohol
- Professional liability for startups offering certain services
- Commercial auto for startups that own business vehicles
Some businesses, cities, building owners, and loan officers require you to carry additional liability insurance before they can work with you or let you operate in their space.
When Should a Startup Get Business Insurance?
A startup should get business insurance as soon as it launches, hires employees, or begins regular operations.
Even if you’re just getting started, insurance helps protect your business against unexpected risks. It’s best to secure coverage before signing contracts, working with clients, or launching your product.
How Much Does Startup Business Insurance Cost?
Startup business insurance costs an average of $20 per month when you get general liability coverage from Insurance Canopy. The total cost of your premiums depends on factors like:
- The type of business you operate
- Coverage types and limits
- Your estimated yearly revenue
- Where your business is located
- Number of years in business
- Any prior claims history
- Hiring employees or contractors
JoAnne Hammer | Program Manager
JoAnne Hammer is the Program Manager for Insurance Canopy. She has held the prestigious Certified Insurance Counselor (CIC) designation since July 2004.
JoAnne understands that starting and operating a business takes a tremendous amount of time, dedication, and financial resources. She believes that insurance is the single best way to protect your investment, business, and personal assets.
JoAnne Hammer is the Program Manager for Insurance Canopy. She has held the prestigious Certified Insurance Counselor (CIC) designation since July 2004.
JoAnne understands that starting and operating a business takes a tremendous amount of time, dedication, and financial resources. She believes that insurance is the single best way to protect your investment, business, and personal assets.
