How Much will Insurance Cost for Your Startup? (Calculator)

Published by the InsureCert Team

Everything you need to know about insurance costs for Startups

Startups are particularly vulnerable and need robust protection from lawsuits because just one catastrophic event could be more than enough to put their business out of business.

Startups face serious odds — about 20% of businesses fail in their first year, and around 60% will go bust within their first three years. However, knowing that you need insurance and knowing what insurance you need are two different things. Especially since startups grow so quickly, finding and budgeting for insurance can be a complicated task.

One way to figure out what insurance might cost is to identify a startup similar to yours in size and type and find out how much their insurance costs. To help you better understand what type of insurance your startup will need and what it might cost, we’ve leveraged our data on startup insurance to create a calculator you can use to find insurance costs for similar startups. Read through our guide or jump to the calculator below.

What Type of Insurance Do I Need?

The first step is to determine what insurance your startup will need at different stages of growth. There are four main types of insurance that you will likely need:

Startup Insurance Guide

Errors & Omissions Insurance (E&O)

Companies that provide services based on professional expertise can be held liable if the information or services they provide include mistakes or experience technical errors that cause damage to the client. Technology Errors & Omissions Insurance protects against claims that arise from these mistakes. E&O Insurance can also include Cyber Insurance, which protects against claims caused by a security breach or mishandling of client data.

Directors & Officers Insurance (D&O)

Once it’s time to start assembling your startup’s Board of Directors, you should add a Directors & Officers Insurance policy to your package. As the name suggests, this policy protects directors and officers if your startup is sued and any board members or company leaders are named in the lawsuit. This type of protection is essential to your startup since it will cover settlement costs and legal expenses. You’ll also find that few people are willing to join your board unless you have a D&O policy in place.

Commercial General Liability & Property (CGL + Contents)

Once it’s time to lease an office, you will have 'trips and fall' exposure as well as fire, damage and theft exposure for everything you own inside the office. Starting with a lease, your landlord will more than likely require you to carry a minimum of $2,000,000 commercial general liability. This covers the landlord against your negligence causing bodily injury as well as damage to the space itself.  CGL and Property together are also referred to as a Business Owner's Policy or 'BOP'

Employment Practices Liability Insurance

Finally, Employment Practices Liability Insurance will be necessary once your startup starts hiring employees. This policy covers claims from within the startup pertaining to workplace issues like discrimination, wrongful termination, failure to promote, sexual harassment, etc.

Depending on your industry and company type, you may also want to consider additional policies like Workers Compensation Insurance, Commercial Crime Insurance, Fiduciary Liability Insurance, and more. However, E&O, D&O, Office Liability & Contents & EPL are the four basic insurance policies that all startups will need.

In Bassanese v. German Canadian News Company Limited et al., an employee was awarded $50,000 in aggravated damages, in addition to damages for wrongful dismissal, arising from the employer’s failure to investigate her allegations of harassment in the workplace.


How Much Will My Insurance Cost?

Budgeting for insurance is important but can be confusing if your company is going through a growth spurt. Your insurance costs will likely change frequently in your startup’s early stages, but you can predict when these changes will occur and how much each change will cost.

The cost of your insurance depends on:

  • Which policies you need
  • How many people are covered
  • How much funding you have
  • Your estimated annual revenue

Using cost calculations for the many different types and sizes of startups we’ve insured in the past, we’ve created a calculator that can help you estimate what your insurance might cost based on costs for similar startups. If you need a more specific estimate, you can get a quote based on your particular startup’s needs.

Get a quote for startups now


Tips for Updating Insurance as Your Startup Grows

Insurance policies are typically reassessed and adjusted each year when it’s time to renew. However, if your startup is growing quickly, you’ll need to be proactive about updating your insurance as your company expands.

The three most relevant benchmarks for estimating insurance costs are operations (what you do), annual revenue, and employees. It would be best if you looked to consult with your provider about adjusting your coverage whenever you hit a new milestone in one or more of these areas.

While your premiums will likely increase as you grow, keep in mind that policy renewals are also an opportunity to renegotiate your rates or shop around for a new provider. 

Get a quote for startups now

To learn more about growing your revenue with digital insurance programs through InsureCert, contact us, or signup for a program builder account and start building your embedded insurance technology solution today. 

More from InsureCert

Top 5 Reasons to Embed Insurance for Renters

According to IBC, Between October 2020 and October 2021, the rental market universe grew by about 40,000 purpose-built rental apartment units (or 1.9%). Demand kept up with supply as the number of occupied apartments grew by roughly 41,000 units (or 2%), resulting in a stable vacancy rate. This represents a significant recovery in rental demand from October 2020. At that time, supply growth had outpaced demand growth by about  26,000 units.   


  1. Offer greater convenience. Renters should be asked to buy Insurance covering their negligence. There is little sense in landlords taking on unnecessary risk and increasing their chances of a claim causing nightmares at policy renewal. Embedded Insurance is an online program that can be configured for instant quoting, binding and certificate issuance. Including monthly payment options can also be leveraged to make the program 'stickier,' with recurring touch-points. Incorporating a monthly payment program will have higher, regular customer engagement and better retention rates.
  2. Add a new revenue stream. Embedded Insurance offers non-insurance people to grab a piece of the insurance pie. For example, branded referral programs are often created as partnerships between online booking companies and brokers. While insurance regulations used to be very strict about affiliate fees, those regulations have relaxed in many jurisdictions, making profit-sharing a possible point of interest for corporations that manage rental units. 
  3. Lower your risk. According to the III, about 1,425 homeowners policies have a liability claim related to the cost of lawsuits for bodily injury or property damage that the policyholder(s) cause to others. Therefore, requiring tenants to carry a Liability policy makes good financial sense. In addition, when you embed Insurance, the technology can be set up to automatically include naming the landlord and property managers as Additional Insured. 
  4. Stay on top of who's insured. Today's insurance programs offer greater value and convenience through technology. When renters buy Insurance, brokers provide dashboards with text alerts, instant certificates and policy wordings. Renewal tracking is tedious, so using APIs to notify you when policies are renewed is a game-changer. Further, when renters miss payments and their insurance policy is cancelled. Landlords and managers can be notified the moment cancellations happen. 
  5. Handle claims easier. What good is requiring proof of Insurance if the claims handling is a total hassle? Insurance programs that capture many users and collect lots of premiums are valuable to carriers and brokers. Make them work for their money by connecting loss notices to insurance companies via API (Application Programming Interface) for free. Lower your claims management costs by incorporating these same APIs into local web apps, so you stay current.  


Today's technology can provide property owners connectivity straight into the insurance company, bypassing over-worked people who can slow things down. The best strategy is to work with a local broker you know that can leverage technology and who you can lean on when things go south. While technology can help us get information quicker, there is no substitute for an agent on your side. 


If you or someone within your organization has to deal with renters insurance, seize the opportunity for your company to grow its revenue and further appeal to your customers' needs. 

TAGS:  EMBEDDED INSURANCERENTERS INSURANCETENANT INSURANCE PROGRAMS

Embedded Insurance: The Top 5 Things You Need To Know How To Make It Work 

Embedded Insurance, part of a broader movement toward Embedded Finance, is about getting more affordable, relevant and personalized.

Within Property & Casualty alone, Embedded Insurance could account for over $700 Billion in Gross Written Premiums by 2030, or 25% of the total market worldwide, and for those that enable it, $3 Trillion in market value. According to Simon Torrance, author of New Growth Playbook. All players – insurers, banks, fintechs, investors, non-financial retailers, product manufacturers, service providers, digital platforms and software companies - should look carefully at this fast-emerging space and define strategies of 'where to play' and 'how to win'.

"The idea behind embedding insurance is that it brings coverage to people who have already established a relationship within a non-insurance company or service provider," adds InsureCert's CEO and founder Craig Arnatt. 

With a growing digital economy and changing demographics, embedding Insurance into consumer products has effectively provided added relevance while offering a simplified customer experience. Think Expedia, one of the first e-commerce sites to embed Insurance; users who buy airline tickets are given an offer to purchase optional travel insurance at checkout. 

Why Embedded Insurance Works

According to Boost Insurance: offering embedded Insurance as a complement to your existing products or services is a great business opportunity. You may not be selling plane tickets or crypto, but chances are you're offering something that Insurance could protect. 

How can every company become a part of embedded Insurance. 

1. Work with an InsurTech-enabled broker who understands your business model. InsureCert enables brokers to bring embedded insurance products direct to consumers using custom applications that offer co-branding opportunities. You can dramatically increase your value by seamlessly integrating innovative insurance products into the customers' purchase journeys at a low cost. 

2. Know your customers.  – individuals and businesses are generally underserved by the insurance industry today. Suppose your product or service requires users to be insured, but you are not offering an embedded solution. In that case, you are missing the opportunity to provide consumers with the financial security insurance offers and tell your users that you care. 


3. Assess the big picture
: the best way to execute, in terms of delivering embedded Insurance, is to discuss customer support and claims management processes with your broker. There is little befit to your company's reputation if the carrier you are funnelling premiums to cannot satisfy basic claims handling. We've all heard of insurance claims nightmares, so work with your broker to incorporate a third-party adjuster or TPA. TPAs are independent claims adjusters who act as unbiased parties between the consumer and carrier. The TPAs job is to eliminate frustration by the consumer and will work to remedy claims that go sideways. 


4. Organize a good rollout
: ensure you have the correct organizational setup and incentives to effectively manage your embedded insurance program. For example, consider adding live chat to your website monitored by a licensed agent who can answer questions about the coverage wordings. As it is against most State and Provincial regulations to sell Insurance using unlicensed staff, lean on the broker facilitating the policy transaction to be ready to support clients online. 


5. Monitor growth by looking for new opportunities
: testing and iterating on all fronts as you move forward is the key to an excellent embedded insurance program. If clients are getting hung up on a poorly worded question or not finding critical information, they can often bound off the page, and the sale is lost. Using a combination of InsureCert Reports and Screen Recording, stakeholders can view real-time customer interactions and receive daily data feeds. Then, make adjustments to questions to make them more transparent or create better access to information to give consumers confidence that they are on the right path. 

About InsureCert 

InsureCert's mission is to build a better front-end for Insurance that enables open and accessible technology for MGAs and brokers. The company's No-Code Platform is a next-gen insurance solution that can embed Insurance into any website using APIs that connect to payment gateways and rating services. Both large and small agencies use InsureCert to automate insurance quotes and certificates using consumer-driven policy dashboards and agent portals.  

Insurance Certificates Anyone? Why we are here

The insurance industry is amid profound change fuelled by converging trends that are creating leaps in innovation and disrupting traditional business models. As a result, insurance is ripe for repositioning in the digital age. 

How many people claim, "I love shopping for insurance" when someone or something forces them to buy an insurance policy. I am sure it's right up there with booking your next Hawaiian vacation or configuring your new car. But, no, for many insurance is the last thing they want to worry about, whether it is paying too much or not getting the right coverage.  

The insurance industry is amid profound change fuelled by converging trends that are creating leaps in innovation and disrupting traditional business models. As a result, insurance is ripe for repositioning in the digital age. 

To ease the transition, InsureCert's thoughtful leadership and insightful design team offer consumers a new generation of solutions that seamlessly integrate and adapt to specific needs. In addition, this approach will align with the emergence of flexible platform-as-a-service architecture commonly found in other industry segments and InsureTech startups.

Based in Vancouver, Canada, InsureCert is a software development company working on decentralization and transparency solutions for the insurance industry. A worldwide patent has been filed to protect the intellectual property behind InsureCert, giving the company a unique opportunity to become "the go-to" platform for evidencing insurance using shared ledger (blockchain) technology. The company is helping consumers and business owners make smarter financial decisions by creating an encrypted insurance wallet that recommends coverage and manages workplace compliance. InsureCert's mission is to transform opaque, centralized workflows into decentralized peer-to-peer solutions.

TAGS:  EMBEDDED INSURANCEONLINE INSURANCEAPI INSURANCE PROGRAMS


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