Which Insurance Type is Best For Your Startup?
Choosing the right insurance for your startup can make the difference between a thriving business and one that quickly folds. The key is to understand the types of insurance available and what they cover.
No business can completely avoid risks, and being insured gives businesses a safety net in case something unexpected happens. Still, with so many options, it can take time to figure out which one is right for your business.
Types of insurance
Here's a quick rundown of the different types of insurance available to businesses:
Professional indemnity
Also known as errors and omissions insurance, this type of insurance covers businesses for any mistakes they may make that result in a financial loss for their clients.
What does it cover?
- Civil liberties claims
- Bodily injury and property damage
- Legal costs and expenses
- PR expenses
- Estates and legal representatives
Who is it suitable for?
Consultants, platforms, advisors, or anyone offering a service or giving advice.
What does UpSure have to offer?
UpSure is a startup specialist that understands the difference between the risk of, let’s say, a peer-to-peer marketplace versus a software-as-a-service product.
This experience and knowledge help us get the best cover in place and ensure you’re adequately covered for the type of company you have - meaning much greater protection.
Financial institution PI
This type of insurance is for businesses that provide financial services. It covers them for any losses that their clients may suffer as a result of the business’s negligence.
What does it cover?
- PI and D&O (directors and officers) for businesses with an Australian Financial Services License (AFSL)
- All civil liabilities
- Claims from acts, breach of duty, breach of trust, misleading statement…etc. while performing professional services.
Who is it suitable for?
Fintechs with an AFSL.
What does UpSure have to offer?
UpSure is an active member of fintech Australia and already insures a big percentage of Australia’s leading fintechs. We understand the insurance requirements to satisfy things like CDR accreditation, AFSL holders and other regulatory bodies.
Public and products liability
Brick-and-mortar businesses will likely want to have this type of insurance to ensure coverage for any losses their customers may suffer due to the business’s negligence.
What does it cover?
- Negligence in causing property damage or personal injury to a third party
Who is it suitable for?
Hardware manufacturers or clients selling a product or with a brick-and-mortar premise.
What does UpSure have to offer?
UpSure has built strong relationships with key decision-makers at many insurance and underwriting agencies. We can insure and protect hard-to-place and complex risks, of which many couldn’t get insurance in the first place.
Crime cover
Arguably the most important type of insurance for businesses, crime cover protects businesses from the financial losses resulting from criminal activity.
After all, it’s not just large businesses that are at risk, but small businesses too. Criminal criminals often see small businesses as easier targets because they tend to have less robust security systems in place.
What does it cover?
- Internal and external theft
- Embezzlement
Who is it suitable for?
Businesses with a risk of money being embezzled or fraudulently stolen, such as fintechs and investment platforms.
What does UpSure have to offer?
Having worked with many startups, we’ve seen a small number of crime claims up close and personal. It’s an area that we enjoy helping clients cover, as there can be dire consequences if you’re not adequately protected.
Cyber insurance
As the name suggests, cyber insurance covers businesses for losses that occur as a result of cybercrime. With the number of cyberattacks increasing every year, it’s becoming more and more important for businesses to have this type of protection in place. Not only can it help to cover the costs of recovery from an attack, but it can also provide peace of mind knowing that you’re protected.
What does it cover?
- First- and third-party loss from a cyber event
- Ransom payments
- Data recreation
- Breach management
Who is it suitable for?
All startups building a tech product and holding personally identifiable information.
What does UpSure have to offer?
As a tech sector specialist, the majority of our clients take up cyber cover. Through our partnership with Entersoft, we can even help companies put the right types of protection in place. With cyber protection, our motto is that “prevention is always better than a cure.”
Business pack
A business pack (or business owners’ policy (BOP)) is a type of insurance that bundles together different types of coverage that businesses need. Business packs are often seen as being more cost-effective than buying separate policies for each type of coverage, and they can also be easier to manage because you only have one policy to keep track of.
What does it cover?
- Property damage
- Theft
- Damage to glass
- Stolen money
- Liability cover
- General property
Who is it suitable for?
Mostly brick-and-mortar businesses.
What does UpSure have to offer?
As a remote-first, hybrid office company ourselves, we know that protecting the office and its contents isn’t usually the first thing on startups' minds. However, as you scale, we can offer our robust experience setting up business packs for growing companies.
Management liability
Management liability insurance protects businesses from the risks that come with being a company. Often considered a package policy, management liability can include protection against wrongful termination, discrimination, sexual harassment, and more.
As a startup, it’s important to have this type of protection in place because you may not have the resources to deal with these types of claims if they were to arise.
What does it cover?
- Protects personal assets of directors and officers in the event of a claim
- Employment practises liability
- OH&S breaches
- Statutory liability
Who is it suitable for?
Any startups that are raising capital or with staff.
What does UpSure have to offer?
As founders ourselves, we understand the risks that new and innovative companies create, often with early-stage HR and hiring policies, pitching to investors, and juggling the many responsibilities that come with being a founder. We know how to ensure you get the right policy in place to cover you, your team, and your company.
Directors and officers
D&O insurance protects directors and officers of a company from being held liable for any wrongful or illegal actions they may have carried out during their work. It can also help attract investors, as they will know their interests are protected.
What does it cover?
- Defence costs
- Legal representation expenses
- Damages
- Judgments
- Settlements
- Bail bond costs
- Crisis costs
- Deprivation of asset costs
- Prosecution costs
- Public relations
Who is it suitable for?
Typically later-stage businesses that fall outside the management liability space, such as listed companies and businesses turning over more than $100M.
What does UpSure have to offer?
For smaller companies, D&O is a part of management liability insurance. Once you scale, our D&O cover protects you from things like class action lawsuits - which is naturally a major risk for all public companies.
Corporate travel
If your business involves any kind of travel, then corporate travel insurance is something you should consider. It’s important to note that regular travel insurance policies often don’t cover business-related trips. So, if you’re planning on doing any business travel, be sure to get a policy that specifically covers this.
What does it cover?
- Emergency assistance
- Medical cover whilst away
- Lost luggage
- Cost of flights
- Accommodation
Who is it suitable for?
Any startup travelling either domestically or internationally.
Marine transit
For businesses involving the transport of goods by sea, marine transit insurance is a must-have. However, you should know that marine transit insurance only covers the transport of goods, not the vessel itself. Protection for your ship or boat will require a separate policy.
What does it cover?
- Goods in local or global transit - inland transit, imports, and exports.
Who is it suitable for?
Hardware manufacturers.
Personal cyber
Personal cyber insurance protects individuals from the financial losses that can result from cybercrime. Whether you're a big family or just you and your partner, this type of policy can cover the cost of recovering from an attack.
What does it cover?
- Personal cybercrime
- Identity theft
- Hacking
- Malware
- Viruses
Who is it suitable for?
Users of smart devices.
Key person insurance
Key person insurance is a type of life insurance businesses take out on key employees. The loss of a key employee can significantly impact a business, so this type of policy can provide financial protection in the event of their death.
What does it cover?
- The event of a vital employee being unable to work
Who is it suitable for?
Any business heavily reliant on one or two key people, which in founder lead companies, is usually the case.
What does UpSure have to offer?
UpSure doesn’t yet offer key person insurance directly, but we work with great partners to get this in place if required.
Intellectual property cover
Intellectual property (IP) insurance covers businesses for the cost of defending and enforcing their intellectual property rights. If you have a unique product or service that you want to protect, IP insurance can be a valuable tool.
What does it cover?
Covers defence and pursuit claims for a client in the event they infringe on or have their IP infringed upon.
Who is it suitable for?
Any business that has developed its own IP, which the business is reliant upon.
What does UpSure have to offer?
Working with some amazing innovative companies, we have had the opportunity to put together programs covering IP insurance, from smart tech products to investment platforms.
The startup specialists
UpSure is your startup’s one-stop insurance solution. We understand that as a startup, you have unique insurance needs and finding the right coverages can be difficult.
We’ve worked with founders across the many realms of the tech sector, and that’s why you can trust us to get you the right protection for your company. Our team of experts can help ensure you are aptly protected, with perks such as staged advice and ongoing support so you’ll never worry about insurance when you’re scaling up.
Get in touch with us today to learn more about the insurance we offer or sign up for free to get started.
