Insurance is one of the few line items where founders reliably either overspend (buying policies they do not need) or underspend (skipping the one policy that would have saved the company). Here is the stack that matters and when to add each piece.
1. General Liability (GL). $1M / $2M limits. Required for most office leases and customer contracts. Cheap — typically under $1K per year. 2. Directors & Officers (D&O). Required the moment you take institutional money. Protects the board and officers from personal liability. $1M to $3M at seed, $5M+ at Series A, $10M+ at Series B. Cost scales with funding raised. 3. Errors & Omissions (E&O) / Professional Liability. Required by most enterprise customers. Covers claims that your product or service caused financial harm. $1M to $5M limits. 4. Cyber liability. Non-negotiable if you handle customer data. Covers breach response, notification costs, and third-party claims. $1M to $5M. 5. Employment Practices Liability (EPLI). Covers wrongful termination, discrimination, harassment claims. Add when headcount crosses 15 to 20.
Seed. GL + D&O + a starter E&O policy. Total spend usually $5K to $15K per year.
Series A. Add cyber and EPLI. Increase D&O limits. Total spend $25K to $60K.
Series B and beyond. Add crime/fidelity (employee theft), key person life insurance if the CEO or CTO is truly irreplaceable, and international coverage as you expand. Layer excess policies on top of primary D&O and cyber. Total spend $75K to $250K.
Data security posture (SOC 2, penetration test results, incident history)
Use a broker who specializes in venture-backed technology companies. They know which carriers write competitive terms for startups, they will bundle policies for volume discounts, and they will fight claims on your behalf. A generalist broker will cost you both premium and coverage.
Read the notice provisions in every policy. Most claims require notice within a specific window — often 60 or 90 days from awareness of a potential claim. Miss the window and the carrier denies. Set up a standing calendar reminder for every quarterly finance review to ask: any claims, threats, or incidents this quarter? That single habit prevents the most common insurance failure at startups.
Insurance is not a place to be creative. Buy the standard stack, at market limits, from a specialist broker, and read the policies once a year. That is enough.
