As a startup the last thing you want to do is to spend your lean budget on insurance, but a certain level of insurance is crucial and advisable.  The question then is- what is the least amount of insurance you need, without spending more than necessary. Some specific type of insurance you need depends on the type of business you intend to start, the kind of business you are currently running or even the size of your company.

Startups at the initial stages of development and idea validation may not need to allocate a huge budget for insurance. At this stage your business is still at its research and development stage and insurance may not be of great significance but some level of insurance may be necessary. If you have started small and occupy an office space, you need to get it covered. If you have hired even one employee, you’ll need workers’ compensation insurance. Workers Compensation Insurance covers the medical/disability needs of employees and is usually a MUST.  At the start of your business, when you have registered it, the founders are the first employees and you all need to be protected

Usually bootstrapped startups working on web or mobile ideas ignore the details and issue of insurance until they have a working prototype. Most startups postpone insurance to a later date when they are an established business with employees. People working from home or garages would rather deal with getting a product ready than bother themselves with insurance. You can research the details of insurance policies by talking to specialist advisors like Lloyds. Seek advice types and amounts of coverage you may need as a growing startup  and develop a package that meets your specific needs.

Insurance may not be your headache now, but when you begin to seek angel investment or venture capital or any kind of investment from an external source, insurance can cause you many more headaches. Some insurance companies are industry specific. Most investors will make sure you have signed on to some insurance products when they come on board and invest in your company. Some may even help you identify the right insurance broker  for your specific business.

Policies you may want to consider for your web or mobile startup include: Technology errors & omissions, media coverage if you are considering media/social networking business, data breach/privacy coverage and in the future when you are able to attract investors and stakeholders you will need directors & Officers Insurance.  As an entrepreneur, you should always think ahead to mitigate future risks while you can. Depending on the long term goal of your company or your exit strategy, you need to understand the insurance consequences at every stage of your startup.