Whether you’re building a tech company, opening a brick-and-mortar storefront, or offering professional services, your business is vulnerable to unexpected events from day one. That’s why having the right commercial insurance coverage is essentially a required part of your new business checklist. Protecting your investment, your people, and your future begins with a strong business foundation, and commercial insurance should be a part of that foundation.
Having said that, startups and new businesses have different needs when it comes to the types of insurance and amounts of coverage they need. These needs can change over time, but there is a level of coverage that is important to have from day one.
Why Startups Need Insurance from Day One
Many startups put off getting insurance until they grow, but waiting can be a costly mistake. Accidents, lawsuits, and cyberattacks don’t wait for your business to be “ready.”
Here’s what could go wrong without insurance:
- A customer slips and falls at your office
- A fire destroys your equipment
- A data breach exposes client information
- An employee files a discrimination claim
These aren’t rare cases, and all of them can result in you having to pay out of pocket. For a startup operating on tight margins, even one unexpected incident could put you out of business. Insurance helps you manage risk, comply with legal requirements, and give your investors, employees, and clients the confidence that you’re in it for the long haul.
What Business Insurance Do You Need Before Opening?
Before you open your doors, physically or virtually, there are a few core insurance policies you should have in place.
General Liability Insurance
This is the foundation of any commercial insurance plan. General liability insurance protects your business from third-party claims related to:
- Bodily injury (like slip-and-fall accidents)
- Property damage
- Legal defense and settlement costs
If your business interacts with the public in any way, this coverage is non-negotiable.
Property Insurance
Whether you lease an office, own your building, or work from home with valuable equipment, commercial property insurance protects your:
- Office space
- Furniture and fixtures
- Inventory
- Computers and tools
It covers damages caused by fire, storms, theft, and vandalism, helping you recover faster.
Professional Liability Insurance (Errors & Omissions)
If your startup offers services, consulting, or advice, professional liability coverage protects you from claims of negligence, mistakes, or failure to deliver on a contract. Even baseless claims can lead to expensive legal fees.
This is particularly important for tech startups, marketing agencies, accountants, consultants, and other service providers.
Workers’ Compensation Insurance
In most states, if you have even one employee, you’re required by law to carry workers’ comp. It covers:
- Medical expenses for work-related injuries or illness
- Lost wages
- Legal costs if an employee sues over a workplace injury
Skipping this could leave you exposed to steep fines and lawsuits.
Commercial Auto Insurance
If your startup uses vehicles for deliveries, travel, or transporting goods and equipment, you’ll need commercial auto coverage. Personal auto policies usually don’t cover business use.
Insurance to Consider as You Grow
Once your startup is established and begins to scale, consider expanding your coverage to include:
Cyber Liability Insurance
With the rise of digital business, data protection is important. Cyber liability insurance helps cover costs related to:
- Data breaches
- Ransomware attacks
- Customer notification and credit monitoring
- Regulatory fines
- Business interruption due to cyber incidents
This is crucial for tech startups, SaaS companies, and any business that handles sensitive data.
Business Interruption Insurance
If a disaster forces your business to shut down temporarily, this business interruption insurance helps replace lost income and pays ongoing expenses (like rent or payroll) until you can reopen.
Startups with physical locations, warehouses, or retail stores should strongly consider this protection.
Employment Practices Liability Insurance (EPLI)
This policy protects you from claims related to:
- Wrongful termination
- Discrimination
- Sexual harassment
- Retaliation
As your team grows, so does your exposure to HR-related risks.
Directors and Officers (D&O) Insurance
If your startup has a board of directors or attracts investors, D&O insurance protects decision-makers from personal liability for actions taken on behalf of the company.
It’s often required during funding rounds or when recruiting high-level executives.
Get the Commercial Insurance Your Business Needs
At the Patrick J. Thomas Agency, we specialize in helping startups and small businesses find custom commercial insurance plans that properly protects their business. We’re advisors who help you assess your risks, avoid coverage gaps, and grow with confidence.
Insurance may not be the most glamorous part of building a business, but it’s one of the most important. Get in touch with us today to get the insurance your business needs.