Startup Survival: 7 Insurance Types You Can't Afford to Skip

Starting a new business is both an exciting and challenging endeavor, and while the potential for success is high, the risk of failure is equally significant.

Entrepreneurs often focus on product development, marketing, and customer acquisition, but one crucial aspect that many overlook is insurance.

Ultimately, insurance is essential for safeguarding a startup’s financial future and protecting you from unforeseen risks. To mitigate these risks, startup entrepreneurs should consider several types of insurance coverage.

1. General Liability Insurance

General liability insurance is a must-have for any business, including startups. It protects against claims of bodily injury, property damage, or personal injury that occur on your business premises or due to your operations.

For example, if a customer trips and falls in your office, or if your product causes harm to a customer, general liability insurance covers the cost of legal fees and settlements. This type of insurance is key to maintaining your business’s reputation and ensuring that a single incident doesn’t lead to financial ruin.

2. Professional Liability Insurance

Also known as errors and omissions insurance (E&O), this coverage is designed for businesses that provide professional services or advice.

If a client claims that your services caused them financial loss, professional liability insurance can cover the legal costs and potential damages.

This is especially important for consultants, marketers, designers, and anyone who offers expertise to clients, as it protects against claims of negligence or mistakes in the course of business operations.

3. Product Liability Insurance

For startups that manufacture or sell products, product liability insurance is a must. This coverage protects against claims that a product caused harm or injury to a customer.

No matter if it’s a defective product, an issue with packaging, or inadequate instructions, product liability insurance helps cover the costs of legal fees, settlements, and damages.

Ultimately, it’s essential to ensure that your products meet safety standards and that you’re covered if something goes wrong.

4. Workers’ Compensation Insurance

As your startup grows, you may hire employees to help run your business. As such, workers’ compensation insurance is required by law in most states.

This type of insurance covers medical expenses and lost wages for employees who are injured or become ill while on the job. Workers’ compensation protects your employees and minimizes the risk of lawsuits related to workplace injuries.

Also know that even if you don’t yet have employees, workers’ compensation can provide protection for yourself if you are injured while working in your business.

5. Commercial Property Insurance

Commercial property insurance covers your business property—whether you own or lease a space.

This insurance protects against losses caused by damage to your building, equipment, inventory, or supplies due to incidents like fire, theft, vandalism, or natural disasters.

For startups that rely on physical assets, such as offices, warehouses, or storefronts, this insurance can safeguard against financial setbacks caused by unforeseen events.

6. Business Interruption Insurance

Even with proper planning, unexpected events can disrupt your operations (just think of what the pandemic did to businesses—big and small—across the country).

Business interruption insurance covers the loss of income that occurs when your business is forced to temporarily close due to circumstances like a fire, natural disaster, or equipment breakdown.

This insurance will address operating expenses, such as rent and payroll, while your business is closed. It confirms that your startup can recover and resume normal operations without significant financial loss.

7. Cyber Liability Insurance

In today’s digital world, cyberattacks and data breaches are growing concerns for businesses of all sizes.

Cyber liability insurance protects against losses resulting from cyberattacks, data breaches, or other online threats.

If your startup stores sensitive customer data, handles financial transactions, or operates online in any capacity, you should carry this type of policy. It helps cover costs related to data loss, legal fees, notification to affected customers, and damage to your business’s reputation.

Why You Need an Insurance Specialist

As a startup entrepreneur, securing the right insurance coverage is essential to protect your business and its future.

Don’t leave your company’s financial well-being to chance—partner with an insurance specialist like the professionals at FullHR. We can help you identify your risks and craft an insurance strategy that meets your needs. Let our team guide you through the process, ensuring your business is adequately protected against the uncertainties of the entrepreneurial world.