Many owners of startup businesses don’t think they need business insurance because their operation is too small.
Nothing could be further from the truth.
Startups, especially in their earliest phases, may have less to lose than more established businesses, but when something unexpected happens to them, they could risk losing everything.
It’s the reason why it’s critical for startups to have business insurance coverage. In this article, we’ll reveal the 6 best insurance companies for startups and explain the types of coverages new businesses typically get and when.
- 6 best business insurance companies for startups
- What types of business insurance do startups need?
- How much does startup insurance cost?
- How to find cheap startup business coverage
6 best business insurance companies for startups
Here are our 6 top insurers for startups and new businesses:
- CoverWallet: Best for startup organizations that want to compare quotes quickly
- Vouch: Best for a great digital experience and specializing in business insurance for startups
- Embroker: Best for low-cost startup insurance
- NEXT: Best general liability insurance policy for startups
- Hiscox: Best for new businesses with unique insurance needs
- Simply Business: Best for finding low-cost coverage
CoverWallet: Best for startup organizations that want to compare quotes quickly
CoverWallet is a cutting-edge insurance provider. The firm has developed its own state-of-the-art platform, based on its own algorithms, to ensure it is able to connect startups and small businesses of all kinds with all the business insurance they need at the most reasonable price. The platform makes it quick and easy to get quotes from several providers at once, making it possible to compare ones from highly reputable insurers all on a single screen.
Vouch: Best for specializing in business insurance for startups and a great digital experience
Vouch is the only insurer on our list that specializes in business insurance for startups. You can apply for coverage online, and the company makes it easy to connect with a broker to get answers to business insurance questions and help you identify the right insurance coverages for your startup.
Vouch offers startup business owners:
- Instant proposals: All you have to do is answer a few simple questions to see recommended coverages and pricing.
- Top quality protection: Startups get the same type of coverage through Vouch bigger companies typically have access to.
- Ten types of coverages: You can start with the basics and add more over time.
- Tailored protection: The brokers at vouch will work with you to customize your coverage to protect your business against the unique risks it faces.
- Manage everything online. This includes policies, certificates, claims, and renewals.
You can rest assured knowing that Vouch is backed by many well-known silicon valley investors.
Vouch also provides a great digital experience. It takes us less than 10 minutes to get a business insurance quote for a startup from Vouch. Below is an example of their quote.
Embroker: Best for low cost startup insurance
Embroker is the first fully digital insurer for startups and small businesses in certain industries. The entire quoting and insurance purchase process typically takes less than ten minutes.
Because Embroker is a digital based company, it’s able to pass on what it saves on infrastructure and unnecessary administration to clients. In most cases, Embroker is able to provide the lowest cost startup business insurance in the marketplace. You can also further control your costs by choosing your own policy limits and deductibles.
If you’re concerned about working with a virtual agency, you can rest assured knowing you can reach a business insurance expert over the phone, email, or chat 24 / 7. In addition, Embroker assigns an account manager to every policyholder who gets to know the ins and outs of their business and the unique risks it faces. This is a particularly valuable add on for startup businesses.
Here is a sample startup insurance quote from Embroker.
NEXT: Best general liability insurance policy for startups
NEXT is a 100% digital carrier. They are new, founded in 2016, specializing in providing general liability insurance online for all types of small businesses. If you only need general liability insurance to protect your startups from the most common slip-and-fall and property damage lawsuits, you should definitely consider getting a policy from NEXT
Working with NEXT is fast and easy. You can do everything completely online.
Pros:
- Manage your policies online
- Easy online application process
- Writes their own coverage
Cons:
- Limited specialty insurance types
- Limited customer service support during the buying process
Hiscox: Best for new businesses with unique insurance needs
Hiscox offers a complete array of business coverages and is a leading insurer that specializes in small business insurance.
Hiscox makes it easy to purchase all types of business insurance online. You can also speak with experienced business insurance experts who can help you customize your coverage to meet your unique new company needs. Hiscox also offers top tier service, provides fast quotes, instant coverage, and quick claims processing.
If you choose Hiscox for your business coverage, you can rest assured knowing you’re entrusting your startup to a firm that’s been in operation since 1901. More than 400,000 companies choose Hiscox for their coverage.
Simply Business: Best for finding low-cost coverage
Simply Business is a broker specializing in small business insurance. They work with many carriers with a focus to help you find low-cost coverage that your business may need, including general liability insurance. They vet the carriers that they work with carefully to ensure that all of them have excelleny financial ratings.
Pros:
- Easy to get and compare several quotes online
- Able to get quotes from A-rated carriers which you may not be aware of
- Knowledgeable agents that are available to help you along the process
Cons:
- Quotes online are available for general liability and professional liability only
- Have to file a claim directly with the carriers
What types of business insurance do startups need?
That depends. Startups in different stages often require different coverages:
Business insurance for startups in discovery stage
This is the earliest stage in the startup business cycle. It’s the time when you’re developing a new product or service, are self funded and have no full time employees.
Even though your business is brand new, you still need insurance. A good place to start is by getting a business owners policy (BOP). A BOP includes three of the most critical coverages for startups. Learn more at the best BOP insurance companies.
- Business property insurance. This covers your business location and the tools and equipment you use to run your operation against damage from fire or weather events — or theft. This is important coverage to have even if you work out of your home because your homeowners policy won’t cover damage to — or theft of — work-related equipment or property. Ask yourself: Could you afford to pay out of pocket if your business location burned down or your computer equipment was damaged or stolen? Learn more at the best commercial property insurance companies.
- Commercial general liability insurance: This pays for medical care if a client, customer, or passerby becomes injured on your business property. Ask yourself: Could you afford to pay someone’s hospital and other medical bills if they slip and fall in your business location and break their hip? Learn more at the best general liability insurance companies.
- Business interruption insurance. This insurance is often referred to as loss of business income coverage because it will pay a portion of your lost income if you’re ever unable to operate for a covered reason, for instance, a fire makes it impossible for your business to open. Ask yourself: How long could you stay in operation if you were forced to shut down for a period of time? Learn more at the best business interruption insurance companies.
Answering these questions will help you understand the value a BOP can provide to a business. Another benefit of having one is that it makes it easy to add additional coverage when you need it.
It could also be smart for you to get cyber insurance during this early startup stage. A simple hack, data theft, ransomware attack, or other incident is often all it takes to put a new business out of operation. Cyber insurance pays to communicate with clients, customers and employees if their private information becomes compromised, for ransom to release your computers, to replace lost records and data, and other hack-related costs.
Business insurance for startups in growth stage
Once you start selling products and services, hiring employees, and raising money from investors, it’s usually time to add coverages.
Workers compensation insurance for startups
Once you have employees, it’s likely your state will require you to get workers’ compensation insurance. This pays for medical costs if an employee is injured or gets sick because of job related reasons. It will also pay a portion of a worker’s lost wages while they’re recovering. It also provides short and long term disability benefits if someone is unable to return to their job after an injury for a long time. It typically pays to retrain a worker if their injury or illness makes it impossible for them to ever return to their job. It also pays funeral costs and death benefits if someone passes away because of work related reasons. Learn more about the 10 biggest workers comp insurance companies in the US.
Directors and officers (D&O) insurance for startups
Once you have investors in your business, they will probably require you to get directors and officers insurance. This coverage pays legal and settlement expenses if the officers or directors of an organization are sued because of a business decision they make, including ones that lose money for the investors in it. They’ll also likely require key man insurance, which will cover their interests if something happens to you or any other person who is critical to the success of your business and they are not able to perform their work duties. Learn more why startups needs D&O insurance and the best D&O insurance companies.
Professional liability insurance for startups
Depending on the industry you work in, this could also be the right time for you to secure professional liability insurance. It will pay legal and settlement costs if you or someone who works for you makes a work-related mistake and your business is sued over it. Learn more at the best professional liability insurance companies.
Commercial auto insurance for startups
Commercial auto is another type of insurance new businesses typically purchase during this phase. It covers you and the people who work with you if you’re ever involved in a car accident while driving for work reasons. Your regular auto policy won’t cover you when you are driving to make a delivery, heading to a meeting or for any other job related purpose. Learn more at the best commercial auto insurance companies.
Business insurance for startups in scale stage
Once you have a significant client or customer base and enough employees to have a human resource department, you probably should consider employment practices liability insurance. It will protect your business if it’s sued by an employee for discrimination or sexual harassment. This is great coverage to have when you have managers working for you that you may not have complete control over.
How much does startup insurance cost?
The cost varies and depends on many factors including the industry you’re in, size of your new business, number of employees, and coverages you get. It’s a smart idea to get quotes from several insurers to make sure you get the coverage your start up needs at a price you can afford.
What’s important is that you get adequate coverage to protect your startup from all the risks it faces.
Tip: It can be a good idea for owners of startups to work with a small business insurance agent or representative at a business insurer. They can advise you on whether you have the right coverage and help keep you from wasting money on duplicative insurance. If you already have a good idea the coverages you want to get, it is always a good idea to get several quotes for each coverage to compare and select the cheapest one.
How to find cheap startup business coverage
There are a few ways to find the coverage you need at a fair price:
- Shop around for the best value. Get quotes from a few companies and compare coverages and costs to find the best combination of the two.
- Don’t stop shopping around. Make sure you get new quotes when it comes time to renew your policy.
- Take advantage of discounts. If they’re not offered to you when getting a quote, ask about them, whether you’re buying online or through an agent.
Taking these steps will help ensure you’re not paying too much for your startup business coverage.
