Pre-seed companies generally don't need business insurance until fundraising requires it or when taking on their first customers, particularly in signing their first enterprise contracts. At that point, coverage like cybersecurity insurance may become necessary.
When a company, typically led by the CEO's decision, determines it's time for business insurance, the recommended baseline policies for startups include cyber liability insurance, general liability insurance, and professional liability insurance.
- General liability insurance policies protect against claims made relating to general liabilities associated with operating a business which result in damage to people or property.
- Recent quotes we've seen for this coverage are around $200 USD for $1M per occurrence and $2M aggregate.
- Cyber liability insurance policies protect against claims made as the result of a data breach or software attack.
- Recent quotes we've seen for this coverage are around $2,000 USD per year for $1M aggregate.
- Errors & Omissions insurance policies protect against claims made relating to unsatisfactory work performed by a business.
- Recent quotes we've seen for this coverage are around $3,000 USD for $1M in aggregate.
- Employment Practices Liability insurance policies protect against claims made between managers and employees.
- Recent quotes we've seen for this coverage are around $7,000 USD for $1M in aggregate.
- Directors & Officers insurance policies protect the personal assets of founders and the startup from lawsuits associated with their decisions.
- Recent quotes we've seen for this coverage are around $6,000 USD for $1M in aggregate.
Small businesses often benefit from a combination of the above policies, typically bundled with cyber insurance and subject to a limited cap. For companies ready to secure coverage, we recommend using either Vouch or Embroker's startup program.
After securing external funding and gaining significant customer traction, it becomes more appropriate to tailor risk management policies to specific business needs. Open Core Ventures can introduce you to a professional insurance broker who will help find a more customized solution.