These explanations are brief, general and simple. Coverage is subject to specific policy provisions and individual circumstances. A company should consider the following having the following insurance coverages:


Errors & Omissions Liability (E & O) + Cyber/Network Liability


WHY YOU NEED IT: Form of liability insurance that helps protect professional advice- and serviceproviding

individuals and companies from bearing the full cost of defending against a negligence claim

made by a client, and certain damages awarded in such a civil lawsuit. The coverage focuses on alleged

failure to perform on the part of, financial loss caused by, an error or omission in the service or product

sold by the policyholder. These are potential causes for legal action that would not be covered by a

General Liability Insurance Policy which addresses more direct forms of harm. Cyber/Network Liability

can usually be added to an E&O Policy to protect your exposure of a network going down or private

information leaking and causing financial damage

WHEN YOU NEED IT: Once company goes beta/live, releases software or a client contract requires the

coverage.

APPROXIMATE COST: $2,000-$5,000+; Premiums are based on various factors including gross

revenue, founder resumes and financials.

TIME IT TAKES TO GET IN PLACE: 2-3 weeks. Need an application, resumes and financials.


Workers’ Compensation


WHY YOU NEED IT: Protects you the employer for bodily injury to employees if they get hurt on the job.

The injury must happen in the course of or arising out of employment to be considered a Workers’

Compensation claim.

WHEN YOU NEED IT: Once the first employee is hired whether full time or part time. Founders/owners

have the option of not purchasing Workers Compensation insurance for themselves.

APPROXIMATE COST: Premium is based on payroll, probably $1,000-$2,000 for a few office

employees; Rate is established at beginning of policy and an audit is performed at end of the term.

TIME IT TAKES TO GET IN PLACE: 2-3 weeks. Need estimated annual payroll separated by the class

code and state employed.


Commercial General Liability Insurance and Commercial Property


WHY YOU NEED IT: Commercial General Liability covers bodily injury or property damage cause to a 3rd

party. Commercial Property coverage protects a businesses own business property within the office. This

policy can also cover the loss of use of the premises in the event of a covered loss such as a fire.

WHEN YOU NEED IT: When you start a business but at minimum when office space is leased or when

this insurance is required by contract.

APPROXIMATE COST: $500-$2,500+

TIME IT TAKES TO GET IN PLACE: 1-2 weeks. Premium based on sales, square feet of the office and

property limits.


Directors & Officers Liability


WHY YOU NEED IT: Provides coverage for a loss as a result of a legal action (whether criminal, civil, or

administrative) brought for alleged wrongful acts in their capacity as directors and officers of the company

WHEN YOU NEED IT: When you start a company but at minimum once you have investors or are

required by contract.

APPROXIMATE COST: $1,000-$3,000+

TIME IT TAKES TO GET IN PLACE: 1-2 weeks. Need to fill out application and provide financials.


Employment Practices Liability


WHY YOU NEED IT: Protect your organizations against employee suits for discrimination, wrongful

termination, sexual harassment, failure to hire, etc.

WHEN YOU NEED IT: Once you have a handful of employees.

APPROXIMATE COST: $1,500-$3,000+

TIME IT TAKES TO GET IN PLACE: 1-2 weeks. Premium based on number employees. Need

application and employee handbook (if any).


Key Person Insurance


WHY YOU NEED IT: Helps with cost to replace expertise after an essential founder’s death.

WHEN YOU NEED IT: Once you start making profit, have investors or want to sustain continuation of the

company in case of a founders death. Can be required by investors.

APPROXIMATE COST: $250+ per year

TIME IT TAKES TO GET IN PLACE: 2-4 weeks. Need an application and a medical physical.