Essential Insurance Guide for Tech Startups:

What to Get and When Part 1

This is the first in a 2 part series. At New Century, we work with all types of tech companies from startups at YC to AI companies and even larger tech hardware and software companies to protect their assets.

Tech startups operate in a dynamic and high-risk environment, requiring tailored insurance solutions to protect against liabilities and ensure long-term growth. This guide outlines the key insurance coverages tech startups need, when to get them, and the trigger points for each.

1. General Liability Insurance (CGL)

When to Get It: As soon as you establish your startup and begin operations.

Trigger Point: If you interact with third parties (e.g., clients, vendors) or lease office space.

What It Covers:

• Third-party claims for bodily injury, property damage, or advertising injury (e.g., trademark infringement).

• Legal defense costs and settlement expenses.

Why It’s Important: Even digital-first startups can face risks like slip-and-fall accidents in an office or lawsuits over marketing campaigns.

2. Cyber Liability Insurance

When to Get It: Early-stage startups handling sensitive customer data or intellectual property should secure this coverage immediately.

Trigger Point: Launching a product or service that collects, stores, or processes personal or financial data.

What It Covers:

• Data breaches and cyberattacks, including notification costs, legal fees, and ransomware payments.

• Business interruption due to cyber incidents.

• Reputational damage and recovery expenses.

Why It’s Important: Cyber threats are increasingly common, especially for tech companies managing proprietary technology or customer data. Get a free quote here: www.usnci.com/cyberinsurance

3. Technology Errors & Omissions (E&O) Insurance

When to Get It: Once your startup begins offering software, hardware, or tech-related services to clients.

Trigger Point: Signing contracts with clients that include performance guarantees or service-level agreements (SLAs).

What It Covers:

• Claims of negligence, failure to deliver promised services, or product malfunctions.

• Legal defense costs and settlements related to professional errors.

Why It’s Important: Protects against lawsuits stemming from unmet client expectations or technical failures.

4a. Directors & Officers (D&O) Insurance

When to Get It: Before raising institutional funding or assembling a board of directors.

Trigger Point: Securing venture capital (VC) funding or recruiting high-level executives/board members.

What It Covers:

• Personal liability of directors and officers for claims of mismanagement, breach of fiduciary duty, or regulatory violations.

• Defense costs and settlements for lawsuits brought by investors, employees, or regulators.

Why It’s Important: D&O insurance is often a requirement for VC funding and helps attract top talent by protecting leadership from personal financial exposure.

4b. Key Persons Insurance

When to Get It: Before raising institutional funding or assembling a board of directors.

Trigger Point: Securing venture capital (VC) funding or recruiting high-level executives/board members.

What It Covers:

• Replacing key individuals at the company if a critical life event were to happen (i.e., passing away, end-of-life diagnosis, etc.).

• Recruiting costs and salary costs to the company 

Why It’s Important: Key persons act as a life insurance policy for your company in the case of a tragic event.

We started with these insurance coverages as the basic and core types of insurance your startup should highly consider to protect your startup's livelihood. In most cases, these costs are very minimal relative to the any other expense in the company. Find out how we can help you at www.usnci.com/contact.

See part 2 here: www.usnci.com/guides/techstartupcoverages-part2