Typical Business Insurance Coverages for Early-Stage Tech Companies

Coverages to consider for your early stage tech startup.

Typical Business Insurance Coverages for Early-Stage Tech Companies

 Early-stage tech companies have a host of unique exposures. The well-informed company will make themselves aware of these risks and institute processed to reduce the risks as well as utilize insurance as a financial transfer. Some of these exposures include: 

Directors & Officers (D&O) Liability

Protects your D&Os and your company from claims alleging wrongful acts in their capacity as directors and officers for the organization. Claims can be brought by regulatory authorities (including those that would bring civil and criminal charges), investors, customers, competitors, lenders or finance companies, landlords, families of and/or employees and others. D&O are held personally liable and this can protect their personal assets.

General Liability (GL)

Covers organization for actions of employees, independent contractors and volunteers for Bodily Injury or Property Damage claims arising from any operations of the company.

 Property

Insures against damage/theft for all owned or leased property of the company. 

Hired & Non-Owned Auto Liability (HNOA)

Covers the company for actions of employees related to use of personal or rented vehicles.

Employment Practices Liability (EPL)

Often written in conjunction with a D&O policy, this protects against claims alleging harassment or discrimination from not only employees but also for the company from any third party who alleges they were harassed or discriminated against.

Professional Liability / Errors & Omissions

Protection, including defense costs, against claims alleging your service failed to perform as intended. 

Crime

Coverage for losses arising from internal or external theft from the company, your customers, forgery/alteration, and computer fraud.

Commercial Umbrella

Provides higher limits over General, Hired and Non-owned Auto, and Worker’s Comp Employer’s Liability.

Cyber Liability

Protects you from losses associated with unauthorized access to or theft of your data, computer viruses, denial of service attacks, as well as alleged unauthorized e-commerce transactions. It will also cover any breach of customer credit card information. This covers first party costs to investigate breach; costs to notify those who may have been affected; and protection from suits by a customer or third party alleging financial harm suffered. It can be written in conjunction with the E&O policy.

Worker's Compensation Coverage

State mandated coverage if the company hires any employees. Cost based upon payroll.

IP Insurance

Can provide protection for suits related to the wrongful use of someone else’s Intellectual Property. Costs start at $12k annually. Can also purchase a Plaintiff’s policy that funds the attorney’s fees to enforce the improper usage of your patents. 

Others

Other coverages depending on the operations of the company could include Employed Lawyers Professional Liability Coverage, Pollution Coverage, Executive Personal Umbrellas, and Trade Credit Insurance