How Much Does Startup Business Insurance Cost? (2023 Rates)

Thang Truong
Thang Truong
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Insurance is one of those crucial things that startups must have, and the reason is obvious. Startups are inherently susceptible to failure. Statistics show that over 90% of startups fail in the United States. Sadly, about 10% of these failures happen within the first year. 

While many things add up to the failure of startups, not having business insurance can be a huge disadvantage. But then, understanding that you need insurance and knowing what kind of insurance you need are two very different things. As an entrepreneur looking to start a business, you must know what insurance you need. More importantly, you should know the costs attached to the insurance to plan and budget appropriately. 

This article will show you how much startup business insurance costs. We will also explain the various policies that startups need to achieve success.   

How much does startup business insurance cost? 

On average, basic business insurance policies for small startups might start at $540 per year. That is just for a general liability insurance policy, the most common insurance policy for startups. Annual prices for bigger startups with a comprehensive range of coverage might reach $6,600. That would include other coverages such as workers comp insurance, professional liability insurance, cyber insurance, and directors & officers (or D&O) insurance.

Startup business insurance costs vary by sector, company specifics, and coverage.  

How much does startup business insurance cost per month?

The average cost of startup business insurance is $45 per month. And that is for a general liability insurance policy. If you add more coverages as you grow, the total business insurance cost for your startup can increase to $550 per month. That would include workers comp insurance, professional liability insurance, cyber insurance, and D&O insurance. Below is the average cost breakdown for each coverage:

Startup business insurance coverage Average cost
General liability insurance $45 per month
Workers comp insurance $200 per month
Professional liability insurance $60 per month
Commercial property insurance $70 per month
Cyber insurance$70 per month
D&O insurance $105 per month

These are just the averages. Be sure to shop around with a few carriers or work with a top small business insurance broker like CoverWallet,, or to get and compare several quotes before making your final decision. You can also get a fast quote online with Thimble. It shouldn’t take you more than 5 mins to get a quote from Thimble website.

What business insurance do startups need & how much do they cost?

The sorts of coverage a startup may need are determined by your industry, risks, and the stage of growth of your firm. The following are the main insurance policies that new businesses might need. Some may not apply or be as important depending on your company kind and structure:

Startup general liability insurance cost

General liability insurance protects your company against litigation, claims, and settlements. These may stem from business-related injuries, property damage, or even non-physical crimes like slander or libel. General liability insurance for a startup with only the founding team and a few small customers will likely cost between $400 and $700 per year. With more staff, more clientele, and a high-risk sector, you may pay between $1,000 and $2,000 per year for the coverage.

Learn more at the best general liability insurance companies

Startup cyber liability insurance cost

Cyber liability insurance protects you against financial damages caused by data breaches and other cyber catastrophes. Policies may protect you against losses caused by your firm (first-party) and harm produced by an outside source due to your company’s carelessness (third-party).

Cyber liability insurance may cost your startup between $500 and $5,000 annually, depending on the risks involved.  

Learn more at the best cyber liability insurance companies

Startup workers’ compensation insurance cost

Workers comp insurance pays for an employee’s medical care and missed income if they become sick or injured while working. This policy is mandatory as long as you have employees in most states. A startup with predominantly clerical and office employees would need to spend between $2,000 and $3,000 annually for workers’ compensation insurance.

Learn more at the best workers comp insurance companies

Startup property insurance cost

Property insurance protects your company’s structures and goods from fire, smoke, wind, hail, and vandalism. Flood damage is seldom covered by standard insurance, but the policy typically covers all assets, whether leased or owned. The cost of property insurance varies widely by the specifics of your business property. If you just rent a small office for 10-20 employees, you should expect to pay around $800-$1,500 a year for a commercial property insurance policy.

Learn more at commercial property insurance cost and the best commercial property insurance companies

Startup Business Owner’s Policy (BOP) cost

A Business Owner’s Policy (BOP) combines general liability and commercial property insurance coverages and is usually the cheapest option. Single BOP insurance protects against theft, litigation, fire, etc. If you’re a startup, you may be eligible for a BOP’s low-cost services. A startup business owner’s policy typically costs between $600 and $1200 per year.

Learn more at BOP insurance cost and best BOP insurance companies

Startup professional liability insurance (E&O) cost

Errors and omissions insurance protects your startup from issues bordering on professional errors and negligence. This includes software flaws, physical product concerns like failure to provide items or services specified in the contracts, professional negligence, etc. 

It also insures you in case of project scope disputes when your customer believes you haven’t met the agreed-upon project conditions. A startup or small firm with just a few tiny projects or customers might require professional liability insurance between $600 and $900 a year. A developing company with a few key customers and a larger possibility for large losses may have to pay extra, roughly $1,500 each year.

Learn more at the professional liability insurance cost and the best professional liability insurance companies

Startup Directors and Officers (D&O) insurance cost

Protects your company’s founders, executives, and board members against allegations of unlawful actions, managerial misconduct, theft, unfair competition, and fraud, among other things.

It is common that when you startup receive funding from Venture Capital firm, they will require you to obtain D&O insurance. The average cost of a D&O insurance policy for a VC-backed startup is $1,240 a year.

Learn more why startups and small businesses need D&O insurance and D&O insurance cost

Key man insurance

This is life insurance policy purchased by a startup on the life of a key executive. 

Employment practices liability insurance (EPLI)

Provides coverage for employee allegations that their legal rights have been infringed. Sexual harassment, discrimination, and wrongful termination are examples of such rights. 

Learn more at the best EPLI companies

What factors affect the cost of startup business insurance?

Startup insurance costs vary depending on numerous factors. Here are some of these significant factors that will affect your insurance premiums.

Coverage required and coverage limits

As we see above, different coverages cost differently. If you need more coverages, your startup business insurance will increase accordingly.

Your coverage limit and deductible affect your insurance costs. The coverage limit is the maximum payout for a policy, while the deductible is the maximum you will pay if an incident occurs. 

A high coverage limit means a higher premium, while a high deductible means a lower premium. Make sure your coverage limit matches your industry, company style, and possible losses.

Business size and payroll

The larger your company size (the number of staff you have), the higher your insurance costs. For instance, if you operate a small firm and simply use freelancers, you may not need too many policies. As such, general liability coverage may be sufficient to cover all your risks. That means you may insure your startup or small company for under $500 per year.

However, if you want to hire full-time employees and expand your firm, you must comply with state regulations. That means you will need a workers’ compensation insurance. Depending on local rules, it will cost you a few hundred dollars every year. You may also need a commercial auto insurance policy if your firm uses cars for business. 

Business model, industry, and damages

The industry in which your company operates affects your insurance costs. That’s because the industry gives a general overview of the possible damages that your company may face and needs protection from.

For example, a tattoo parlor owner may cause an allergic reaction or skin infection. The damages could be in the hundreds for a business like this, unlike a graphics design company that makes designs for large financial institutions. One mistake in the delivery of the graphics designer may cost their clients thousands or even millions of dollars, leading to heavy lawsuits. Therefore, the cost of insuring these two companies and the strategies for insurance will vary due to the risk levels involved.

Business location

When establishing a company, you are subject to state and municipal rules, which determine the coverage you need and its cost. Some insurance policies like worker’s comp are compulsory in all states of the United States. However, different states have their policies regarding the minimum limits you should carry and how you can buy the policies.  

Also, some policies are heavily dependent on certain factors in your area. For example, commercial property insurance costs are heavily influenced by property values, weather risk, and other variables.

Employee injuries risk

Employee injuries risk is crucial in calculating workers’ compensation and health insurance. Firms that engage manual laborers such as factory workers and carpenters are likely to pay a lot more in worker compensation because of the risk involved in their jobs.

How to find cheap startup business insurance

A startup that will survive is a startup that understands how to manage its resources. Since you cannot do away with business insurance, the following are some ways you can get good coverage at reasonable costs:  

Compare quotes 

Policy pricing might differ across insurance companies. Before signing a policy, work with an independent broker like CoverWallet,, or to obtain and compare multiple quotes before making your final decision. After getting your policy, also ensure to review them yearly as rates tend to increase after a year. 

Make a plan

First, you need to know your business needs and the policies that meet those needs. Anticipating your insurance needs and obtaining the right coverage options ahead of time may help you save money on premiums and help you avoid unnecessary coverage.


Consider giving out some of your office jobs to independent freelancers instead of hiring full staff at the beginning of your business. This will save you some insurance costs in the form of worker’s comp and other employee-related insurance costs. 

Bundle policies

Insurers often provide discounts when you bundle certain critical coverages. For instance, you can buy general liability and property insurance and BOP. That way, you pay less for all the policies. 

The table above outlines different policies that you may need as a startup founder. You can choose to buy all of these policies from one carrier and it is likely that you will have good bundling discount. However, you have to keep in mind that carrier A might offer you the lowest cost for general liability but their quote for workers comp insurance is one of the highest. In such case, you may not want to buy both policies from carrier A even if they offer good bundling discount. You may be better off buying these two policies from two different carriers who have the lowest quote for each policy. So you have to decide whether it makes sense to buy all policies from one carrier to benefit from bundling discount.

What is startup business insurance?

A startup is a firm in its early stages of operation and is often funded by its entrepreneurial founders and venture capitalists. While a startup may operate and feel differently from a more established firm, this does not imply that its insurance coverage should be less thorough. 

In fact, startups require more protection than regular companies since they do not have the required resources to cover losses or claims. 

Therefore, the term startup insurance refers to policies that insurers specially design to protect startups from losses or claims. Such policies help new companies handle the costs of paying or defending damages and losses, so the business does not fail before it ever gets off the ground. 

What does startup business insurance cover and what does it not cover?

Startup business insurance may protect startups against claims such claims as follows. However, the extent of your particular coverage will be determined by the insurance plan you choose.

  • On-site mishaps
  • Stolen inventory, supplies, and office equipment
  • Defamation of character lawsuits
  • Lost revenue if operations are disrupted due to a covered claim
  • Professional blunders
  • Employee accidents or illnesses

Regardless of how many general policies are available, some hazards, such as flood damage, are not protected unless that specific insurance is purchased.

Furthermore, if you operate as a single proprietor, business insurance for startups does not protect your personal assets. As a result, you will be solely liable for any losses or claims made against the firm. You may protect yourself by incorporating a limited liability corporation (LLC) to separate your business’s assets and responsibilities from your own.

Who needs startup business insurance?

Startups are particularly vulnerable in their early stages, and large losses or damages might cause a company to fail. You need business insurance if any of the following apply to your startup:

  • You meet physically to work with consumers or clients
  • You own or rent a business property
  • You rent out company equipment
  • Your company has valuable assets
  • You run adverts for your company 
  • You have employees 
  • You offer guidance or special services
Thang Truong
Thang Truong

Thang Truong covers small business insurance and small business success at BravoPolicy. He is a licensed P&C insurance agent. Previously, he held product leadership positions at, Capital One, NerdWallet, and Mulberry Technology. He holds a MBA degree from UC Berkeley - Haas School of Business.

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