A contract where an insurer agrees to pay for covered losses in exchange for a premium.
Insurance is a risk transfer mechanism: you pay a premium to an insurance company, and in return they agree to cover certain financial losses defined in the policy. For startups, this typically includes liability, cyber, and professional coverage.
Most startups need at minimum: General Liability (GL), Technology Errors & Omissions (Tech E&O), and Directors & Officers (D&O) insurance. If you handle personal data, Cyber Liability is also essential. The exact requirements depend on your industry, contracts, and investors.
Buy insurance before you need it—ideally before signing your first vendor contract, closing a funding round, or hiring employees. Many enterprise clients and investors require proof of insurance before doing business with you.
Definitions are educational and may be modified by your specific policy language, endorsements, and state rules. For regulatory guidance, refer to the California Department of Insurance or the NAIC.
Last updated: July 2026.