Protecting to Your Startup Hustle

When your business is first sprouting its wings and gaining steam, the last thing you probably want to think about is insurance. If it were up to you, you’d be focused on nothing more than continuing that growth and making sure your business reaches its full potential. Unfortunately, we live in an imperfect world—and for founders, insurance is a necessary evil to protect your growing business from being sued into oblivion (this is 2018, after all). At the same time, knowing where to begin in navigating the complex business insurance landscape can be difficult. By knowing the right questions to ask yourself and what to look for in an insurer, you’ll be off to a solid start.

We sat down with Benji Markoff, Founder & CEO at Founder Shield, to get his expertise and insight on how founders can best navigate the insurance jungle. Benji is also an Operating Partner at Interplay Ventures and President at New York Venture Community,  and these experiences give him great insights into the challenges of launching and growing a business from the ground up. Here are some takeaways from our conversation with Benji that we hope you can use when addressing your insurance needs.

It’s a Learning Process

Business risks can vary, of course, depending on the specific industry you’re in. And risks aren’t always as obvious with a business as they are for, say, a house. When you buy a house, insurance is a given. Not only will your mortgage lender probably require it, but it’s easy to imagine all the disasters that could impact your home. Fires, hail damage, storm damage; you name it. With a business, imagining risks isn’t always as easy.

As you begin exploring your coverage needs, make sure you find a partner to provide you with the right knowledge and education around insurance. You want an insurance company that is focused on asking the right questions and providing the expertise specific to your company and industry. It’s very much an education process when it comes to buying insurance. The company you go with should not only be able to identify the risks and provide the solutions, but also educate you throughout the process so that you can understand the value-add of insurance.

What Types of Coverage Do You Need?

Now, consider the specific types of coverage your business could benefit from. Some of the more common types include:

  • Commercial general liability (GL) – protects your company in the event of a lawsuit resulting from an accident, negligence or similar.
  • Product liability – provides coverage for lawsuits brought forth due to products you sell, especially in the case of an alleged product defect.
  • Professional liability – protects against claims related to malpractice, errors, or failure to deliver to customers.
  • Commercial property – offers coverage for your company’s physical property in the event of fire, storm damage, crime, etc.
  • Workers’ compensation – covers costs of job-related injuries for any employees you may have.

While not all companies will need all these forms of insurance, there’s a good chance you’ll need the majority of these. Of course, if you don’t yet have a physical office (for example, if you’re still operating out of your home office), you may not need commercial property coverage. However, if your home insurance policy doesn’t cover items in your home office, or clients visit in-person, it can’t hurt to have this extra coverage. The key is finding the right insurance company to talk through your startup’s growing needs and make sure you have the right coverage from day one.

Finding the Right Insurance Company

Not all insurance companies are created equal. As a founder, it’s important to work with an insurance company that has worked successfully with scaling startups in the past. Consider for a moment that both Facebook and Uber had a hell of a time getting anyone to insure them when they were first starting out. You’ll want to find an insurance company that will take your needs seriously and make sure your coverage expands as quickly and seamlessly as your business does. Some questions you should be asking yourself as a founder:

  • Does my insurance team understand my business?
  • Do they have expertise in my industry?
  • Are they invested in my growth and are prepared to scale with me?

Dear Underwriters

In addition to founders being educated on the types of insurance they need and how to find the right company for coverage, insurance underwriters also have a responsibility to understand what insuring a tech or startup company entails. By taking the time to understand the business and underlying technology of today startups, insurance carriers and underwriters can better serve these clients and avoid missing out on major opportunities.  You don’t want to end up like those carriers who passed on insuring Facebook and Uber.

We get it; insurance is the last thing you want to worry about when you’re focused on growing and scaling your business. By working with a partner who really understands your business and can educate your carriers on your needs will produce success for all parties involved. Keep these tips in mind and you’ll be better prepared for the fires that do come up.


Leave a Reply

Your email address will not be published. Required fields are marked *