What types of general business insurance do we need?

September 19th, 2013

Hi All,

Our startup is getting launched, and we have a good amount of our backoffice resources in place: workers comp, disability, and unemployment insurance is all being handled by our PEO (BTW, I highly recommend the folks at Justworks -- they're an absolute joy to work with).

But beyond that, the world of insurance gets complicated. There's product insurance, D&O insurance, etc. -- and as a registered Corporation, we're trying to understand everything we should get AND the best providers out there.

Any hints or tips? We want to make sure that we have all of this in place before we even think of deploying a product.

Thanks for your help!

Russ Wallace Managing Director, SF at Prolific Interactive

September 19th, 2013

I wouldn't worry about general business insurance unless/until a partner with whom you have a big contract insists on it.

You're already taking risks by running a startup; what you don't need are superfluous expenses. Granted, insurance, when you need it, is hardly superfluous, but if you run out of money, that's pretty bad, too.

Save your dollars for the things that matter the most: user acquisition & product. The rest are problems that are highly unlikely to occur until you succeed.

Juston Brommel Growth Strategist & Advisor to CEOs

September 19th, 2013

Ask a lawyer and accountant. I recommend skipping anything no crucial, but you'll have to assess risk. The risk of going out of business in month 12 is generally much higher risk than insurance issues - depending on your industry and business practices of course.

Steve Tulk Change Agent

September 19th, 2013

Agree with the above, talk to a lawyer, get only what you need. You can also reach out to insurance cos and get their perspectives. Depending on your business, there are typical policies, amounts, deductibles, etc. I am in the process of getting insurance for my company (professional services: mgmt & tech consulting) because a contract required specific types and minimums. The insurance broker said what was requested was pretty typical. (Gen liability, auto liability errors & omissions) and was in line for state minimums (I'm in VA). It took about an hour to go through the various questions and description of my business, and it appeared to be specific to a category (they categorized me as IT Products and services, even tho I have no immediate plans for a product). If I was a building contractor I'm sure there would be different q's, or if I was making a widgit, etc...

I think for me it will cost about $600/ year for $1M gen liability, $1M Auto liability, $1m property, and $1m e&o. Each of those is per incident.

Daniel Ruch Founder at Rocketrip

September 19th, 2013

You need general liability. We use travelers. Can put you in touch with a vendor that gets discounts if you like? -- Daniel Ruch +1 917 658 7158

Stephan von Perger

September 20th, 2013

If you have employes based in the UK, you are legally required to have Employer's Liability Insurance (ELI) with cover of at least £5m. If you dont have ELI they can apparently fine you uo to £2500 per day.

In my current co, we pay around £80 per year for this insurance, but our policy includes Public Liability insurance (not required by UK law, but no insurance firm will sell ELI as standalone product).

Let me know if you have more questions.

Stephan

Toby Herrera New Product Development and Contract Engineering

September 21st, 2013

Agree with Justin above. cash flow and business need to come first.