As a startup founder, you’re ready to build a game-changing platform. Success isn’t guaranteed, but you’ve hired a core crew of motivated employees, and you’re ready to turn your passion into a reality. As a fledgling business, you don’t want an expensive claim of wrongdoing to take the wind from your sails before you’ve even left the ground. For that, you need insurance.

Unfortunately, this is one big question mark on your to-do list: What kind of insurance do you need?

Your insurance needs as a startup depend on your industry and the specific risks related to your business. In this short guide, find out how to get coverage and protect your bottom line so you can rest easy and focus on your growth. Startup owners, let’s do this.

Why startups need insurance

As a startup owner, you might be thinking: Wait. I don’t own a full-scale company. Do I really need insurance?

While startups might not have a fully-formed business in the traditional sense, they’re just as susceptible to errors and accidents as companies of all kinds. Could any of the following incidents take place at your startup?

  • Damage to a client or third party’s tangible property
  • Bodily injury to a client or third party visiting your workspace
  • Errors or mistakes related to your professional services
  • Employee injury
  • Damage to your property

If you can envision any of the above happenings while your startup begins conducting business, you need insurance. If you can’t quite picture these scenarios, this guide will walk you through examples of each, as well as show what kind of insurance would cover you.

General liability insurance

Most startups, like just about any business, need general liability insurance. This kind of insurance can help provide coverage from claims of:

  • Bodily injury to clients or third parties
  • Client or third-party medical costs
  • Client or third-party property damage

If you have any kind of physical workspace, you likely need this kind of insurance. Let’s take a look at some examples:

  • Bodily injury – You own an event planning startup with a novel, app-based approach. Although some of your team works remotely, you maintain a brick-and-mortar office. Should a client visit your office and sustain any bodily injury while there, they could sue you.
  • Property damage – Your catering startup works events all over the city. Should a mishap occur in which designer clothing or carpet gets stained, you could find yourself liable for the property damage and replacement expenses.

While general liability insurance covers a wide range of potential incidents, it has its limits. Most notably, it does not cover:

  • Third-party claims of negligence or errors
  • Damage to your business’ property and assets
  • Employees’ bodily injury or medical costs
  • Damage to client’s or third party’s intangible property (i.e., data)

Professional liability insurance

While general liability insurance covers a range of mishaps that can take place in physical space, professional liability insurance covers errors related to your professional services that result in a client’s financial loss.

Also called errors and omissions (E&O) insurance, this is a must-have for any startup that offers its clients expertise and professional advice. If your mistakes lead to your clients’ financial loss, you need this insurance.

Potential claims could include:

  • Errors – Your videography startup is beginning to shoot commercials. Should one of your shoots go wrong, creating unusable footage, and your client’s commercial air time goes to waste, they could sue over lost potential business and the wasted money they paid the broadcasting network.
  • Professional negligence – Your programming startup creates apps for clients. Should you fail to launch an app on the agreed-upon date, leading your client to spend thousands in marketing for a product that isn’t ready, they could sue you for their financial loss.

It’s important to note, however, that professional liability insurance does not cover intentional wrongdoing. If you knowingly mislead your client, your insurance will not cover the incident.

Workers’ compensation insurance

Hiring your first group of employees comes with fresh possibilities and an additional business insurance cost for startups: workers’ comp.

While general liability insurance can provide coverage in the case of client or third-party injury, what if one of your employees is injured during the course of their work?

Workers’ compensation insurance can cover:

  • Medical treatment for employees
  • Lost wages due to an injury sustained by a member of your team

For example, if one of your employees at your tour guide startup tumbles while leading a tour and ends up with a bodily injury, this insurance could help pay their medical costs, as well as their wages during rehabilitation.

Commercial property insurance

We’ve already talked about damage to your clients’ property. However, your startup likely owns some assets (from computers to desks to specialized equipment).

To insure this property against damage, you should consider taking out commercial property insurance coverage.

Ready, set, startup

While there’s no unique policy called “startup insurance,” familiarity with all kinds of business insurance can help you determine your startup’s needs. As you open your doors, remember to consider the following kinds of insurance:

  • General liability insurance
  • Professional liability insurance
  • Workers’ compensation insurance
  • Commercial property insurance

Every next level you reach with your business presents new risks. Don’t go it alone; get insured and go with the confidence of insurance, so you can take on any challenge that startup life throws your way.

With Thimble, startup insurance has never been easier. With fast, flexible insurance from Thimble, you can take out general liability insurance or professional liability insurance in under 60 seconds. Download the Thimble app or click “Get a quote,” enter your ZIP code, your crew size, and a few details related to your services, and a quote will generate instantly.

Most startup business insurance costs are hidden in fees and fine print. Not ours.

With the Thimble app, you can make changes to your policy whenever you like, and add as many Additional Insureds as you need when your business grows (all for free). We take the hassle out of insurance, mitigating one less headache for startup owners. (We get your needs, because we’re a startup too!)

You focus on growing your business, we’ll focus on protecting it.