General Liability
Insurance
Whether you’re working on your first startup or your fifth, General Liability insurance is likely the first policy you’ve seriously considered buying. That’s because General Liability is often required by landlords, partners, and clients, all of whom you’ll likely encounter early in your startup experience.
This coverage can offer important baseline protection, protecting your business assets when visitors get injured on your property or by your product, when a third party accuses you of libel or slander, or when a lawsuit results from these types of third-party damages.
Who & When
Seed investors are often your family and friends. They’re going out on a limb for you and your business. Having a General Liability policy is one way to return the favor. With General Liability coverage, you can offer them the peace of mind that if you face certain common lawsuits, you’ll be able to cover your legal costs without tapping into your business funds.
When you’re ready to raise your Series A, investors will almost certainly require you to have General Liability coverage. In fact, it’s such a common contract requirement that we find experienced founders tend to buy this coverage right away, as soon as they launch a venture.
With Vouch, there’s no reason to put off getting your General Liability policy. It takes roughly 10 minutes to apply, we’ll recommend coverage limits specific to your business needs, and you can have an active policy within 24 hours. Boom. One less thing on your to-do list.
General Liability insurance is so foundational that it’s the one policy whose benefits transcend industry and company size.
Even if you’re still operating from a home office, you can benefit from General Liability insurance. That’s because most homeowner’s and renter’s policies specifically exclude coverage for business-related activity.
Important note:
If you are based in a home office, you probably won’t need as much GL coverage as a larger company. When you get your policy through Vouch, we’ll make sure you only pay for the coverage you need.General Liability insurance is so foundational that it’s the one policy whose benefits transcend industry and company size.
Why
There’s no law requiring startup founders to carry General Liability insurance (as there is with, say, Workers Compensation). But many of the professional relationships essential to keeping your business running require you to have this coverage.
Lease Requirements
As we mentioned earlier, most commercial leases (including those at many coworking spaces) require renters to have General Liability coverage. This is one way commercial landlords manage their risk. If you want to sign a lease for a workspace, you’ll likely have to show proof of coverage.
Contract Requirements
Whether you’re hoping to sign an enterprise client for your SaaS product or bring on a partner for the gadget you build, your business partners will likely state in their contracts that you’re required to have General Liability coverage.
Lawsuits
Even if you don’t have any major contracts requiring you to carry General Liability insurance, as soon as you sell a product or service to the public, you’re at risk for lawsuits. Even having a social media page puts you at risk for advertising injury. A General Liability policy can cover the costs of the types of lawsuits outlined here.
Third-party exposure
Not all accidents lead to lawsuits, of course. But they might still cost money. A potential employee who slips on coffee in your coworking space after an interview and hits their head on the way down, for example, might need an ambulance ride and medical bills – and your General Liability policy may be able to pay for both.
Even if your startup is just you and your laptop, you may have General Liability exposure. For example, copyright infringement costs upwards of $150,000 per incident. If you accidentally use the wrong image in a social post and the copyright holder sues, you could be facing steep legal bills – but with General Liability coverage, you’d likely have the means to pay.
What
We’ve established that General Liability insurance is a baseline coverage that nearly every startup can benefit from. One reason it’s so powerful is that this single policy includes several types of coverage, including the following.
Third-party Injury
If a visitor gets injured on your premises or because of your startup, your General Liability policy can cover the costs of their medical bills. If the visitor sues over their injury, your policy may also cover the associated legal fees, including any settlement or judgment, if your startup is found liable.
Third-party Property Damage
If your product or service is responsible for damaging the property of a third party, your General Liability policy may be able to cover the costs of repairing or replacing that property. Note that in order to make a claim, the value of the damaged property would likely need to be greater than your policy’s deductible.
Third-Party Medical Expenses
We mentioned above that your policy might cover the injured client’s ambulance ride. This is thanks to a special coverage most General Liability policies have called Medical Expenses coverage. This coverage typically has a relatively low limit within the policy and is designed to encourage founders to play it safe and call the ambulance. For insurance companies, it’s less risky to have injuries checked out quickly than to let them potentially worsen over time.
Product Liability
If your startup manufactures, distributes, or sells a product, there’s a chance that it could harm someone. The product liability portion of your General Liability policy can cover the costs associated with that harm, including property damage or physical injury.
Advertising Injury
This includes accusations of slander, libel, defamation, and invasion of privacy associated with your advertisements or publications. In the days of social media, SEM, and blogs, even the smallest startups can have advertising injury exposure. Anything you publish, online or in print, could trigger accusations of wrongdoing by parties who feel they’ve been impacted. Luckily, the advertising injury portion of your General Liability policy can likely cover any associated legal costs.
Damage to company property
For that, you’ll need Business Personal Property insurance. Note: you may be able to bundle your Property and General Liability into a Business Owner’s Policy (“BOP”).
Employee lawsuits
These will likely be covered by Employment Practices Liability, Fiduciary, or Employee Benefits Liability coverage.
Employee injury claims
Workers’ Comp comes into play here. As mentioned earlier, most states require any startup with employees to carry this coverage.
Data incident
For this, you’ll need Cyber insurance.
Professional liability lawsuits
For claims that your professional work caused financial harm, you’ll need Errors & Omissions (also called Professional Liability).
Claims against your directors and officers
For that, you’ll need the aptly named Directors and Officers (“D&O”) policy.
How
First things first: Vouch was built by founders for founders.
So when you get your General Liability insurance through us, we’ll automatically bundle it with Business Property to make you a “BOP” (Business Owners Policy). That’s because we’ve yet to come across a startup that needs GL and can’t benefit from the other protections a BOP offers.
Beyond the actual product, our process is also easier.
Instead of a few weeks swapping PDFs with a broker, you can…
Apply in just 10 minutes.
Get covered within 24 hours.
Handle everything online.
Explore additional startup coverages
Foundational protection for the risks of running a startup.
Protection from disaster and theft.
Protection for your founders, officers and board members.
Protection for bugs in your product that cause financial losses.
Protection for mistakes with employee benefit plans.
Protection for allegations of wrongdoing in the workplace.
Protection for the damages caused by data breaches.
