Building a startup means taking calculated risks, but insurance shouldn’t be one of them. At the Series A stage and beyond, missing or inadequate coverage can quietly derail growth, like stalled enterprise deals, delayed fundraises, failed vendor onboarding, or even personal liability for founders and board members.

The right startup insurance protects your runway, your leadership team, and the people who’ve invested in your success. It also signals operational maturity to customers, investors, and partners who expect risk management to scale alongside revenue.

With dozens of policy types available, it’s not always obvious what coverage you actually need or when. This guide breaks down the core types of insurance startups rely on as they grow, why they matter, and how to align coverage with real business milestones.

Startup Insurance by Stage: A Quick Overview

As startups grow, insurance decisions tend to shift from reactive to strategic. What starts as a handful of basic policies quickly becomes part of how the business manages risk, closes deals, and meets investor expectations.

The table below outlines the types of insurance most venture-backed startups adopt as they reach each stage of growth.

Learn more about when your startup needs different types of insurance.

‍General Liability Insurance

General Liability Insurance is foundational coverage for startups and often the first policy companies purchase. It’s frequently required before signing office leases, vendor agreements, or partnership contracts and protects against basic business risks, like bodily injury, property damage, and third-party claims.

For example, if a visitor is injured at your office or a vendor claims your company caused property damage, General Liability helps cover legal defense and settlement costs.

When you need General Liability Insurance:

• Signing an office or coworking lease
• Working with vendors or partners
• Hosting in-person meetings, events, or demos

Learn more about what General Liability Insurance covers.

Business Property Insurance

Business Property Insurance covers company-owned equipment like laptops, monitors, servers, and office furniture. Even distributed teams rely on physical assets to operate. Business Property Insurance helps repair or replace equipment if it’s stolen, damaged, or destroyed due to events like fire, theft, or natural disasters.

For startups with dozens or hundreds of employees, replacing hardware out of pocket can quickly add up.

When you need Business Property Insurance:

• Your team uses company-owned laptops or hardware
• You maintain an office or shared workspace
• You want protection against loss from fire, theft, or weather events

Errors and Omissions (E&O) Insurance

Errors and Omissions (E&O) Insurance protects against claims that your product or service failed to perform as promised. Also known as Professional Liability Insurance, E&O is critical for revenue-generating startups, especially in SaaS, fintech, AI, healthcare, and other high-stakes or regulated industries.

If a customer claims a software bug caused financial loss, a service outage violated an SLA, or your product didn’t meet contractual requirements, E&O can help cover legal costs and damages.

When you need E&O Insurance:

• You’re charging customers for your product or service
• You’re signing B2B contracts or SLAs
• Customers require insurance during procurement or due diligence

Cyber Insurance

Cyber Insurance covers costs related to data breaches, cyberattacks, and other security incidents. Most startups handle sensitive customer data, often earlier than they realize. Cyber Insurance helps cover breach response, legal fees, regulatory fines, customer notification costs, and business interruption after an attack.

For Series A+ companies selling to mid-market or enterprise customers, cyber coverage is often non-negotiable.

When you need Cyber Insurance:

• You store, process, or transmit customer data
• You’re subject to privacy regulations like GDPR or CCPA
• Security questionnaires are part of customer onboarding

Workers’ Compensation Insurance

Once you hire employees, most states require Workers’ Compensation Insurance. It covers medical expenses and lost wages if an employee is injured on the job and helps protect the company from related lawsuits. It’s legally required coverage for employee injuries and work-related illnesses.

Coverage requirements vary by state, making compliance especially important for distributed teams.

When you need Workers’ Compensation Insurance:

• You hire your first employee
• You operate in states that mandate coverage
• You’re scaling headcount across multiple locations

Employment Practices Liability Insurance (EPLI)

Employment Practices Liability Insurance (EPLI) covers employee-related claims like discrimination, harassment, retaliation, or wrongful termination. As teams grow, so does exposure to employment-related risk. EPLI helps cover legal defense costs, even when claims are unfounded, and is increasingly common for startups with growing headcounts.

When you need EPLI:

• You’re hiring full-time employees
• You’re scaling rapidly
• You want protection against costly HR-related claims

Directors and Officers (D&O) Insurance

Directors and Officers (D&O) Insurance is a must-have for venture-backed startups. It covers claims related to mismanagement, breach of fiduciary duty, or regulatory noncompliance and is often required to close a Series A or later round. It protects founders, executives, and board members from personal liability related to company decisions.

Without D&O coverage, founders and board members can be personally named in lawsuits, even if the company can’t afford to defend them.

When you need D&O Insurance:

• You’re raising institutional capital
• You’re forming a formal board
• Investors request it during diligence

Crime Insurance

As startups manage larger cash balances, Crime Insurance protects against losses caused by dishonest acts, whether internal or external, and covers financial losses due to fraud, embezzlement, or theft.

This coverage is commonly required by investors post-Series A.

When you need Crime Insurance:

• You’ve raised venture funding
• You manage significant cash or payment flows
• You’re scaling financial operations

Key Person Insurance

Key Person Insurance provides financial protection if a critical leader is unable to work. Some startups depend heavily on one or two executives, and Key Person Insurance helps the company stay afloat if a founder or essential leader becomes incapacitated. It’s also sometimes required by investors to mitigate leadership risk.

When you need Key Person Insurance:

• Investors raise concerns about leadership concentration
• The business relies heavily on a single executive’s expertise
• You’re in late-stage fundraising conversations

Do You Need All of These Policies at Once?

Not necessarily. Buying everything too early can be as inefficient as buying nothing at all. The smartest approach is to align insurance with real risk, including contracts signed, employees hired, and capital raised. Early-stage companies often start with General Liability Insurance and Business Property Insurance, then layer in E&O Insurance, Cyber Insurance, and employment-related coverage as they scale.

Why Startup-Focused Insurance Matters

The cost of insurance is small compared to the potential cost of an uncovered lawsuit, data breach, or regulatory issue. The right coverage protects your runway, accelerates sales cycles, and builds confidence with investors, customers, and partners.

Modern providers like Vouch are built specifically for startups, offering coverage that evolves with your business. That means faster approvals, fewer deal delays, and protection that matches how high-growth companies actually operate.

Frequently Asked Questions

What insurance is legally required for startups?

Requirements vary by state, but most startups are required to carry Workers’ Compensation Insurance once they hire employees. Other policies may not be legally required but are often mandated by landlords, customers, or investors.

When should a startup buy business insurance?

Startups should secure insurance at key milestones, including hiring employees, signing customer contracts, raising capital, or leasing office space. Waiting too long can delay deals or funding.

Do early-stage startups really need insurance?

Yes. Even early-stage startups face risks related to employment disputes, data security, and third-party claims. Insurance helps protect limited capital and demonstrates operational maturity.

What insurance do investors expect startups to have?

Investors typically expect Directors and Officers Insurance by or shortly after a priced round, along with General Liability and Cyber Insurance. Crime Insurance and Key Person Insurance may also be required depending on your risk profile.

What insurance do startups need to close customer contracts?

Many customers require Errors and Omissions Insurance and Cyber Insurance before signing contracts, particularly in B2B, SaaS, and regulated industries.

Vouch Specialty Insurance Services, LLC (CA License #6004944) is a licensed insurance producer in states where it conducts business. A complete list of state licenses is available at vouch.us/legal/licenses. Insurance products are underwritten by various insurance carriers, not by Vouch. This material is for informational purposes only and does not create a binding contract or alter policy terms. Coverage availability, terms, and conditions vary by state and are subject to underwriting review and approval.

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