Best Startup Business Insurance in 2022

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Why is insurance essential for startups and small businesses?

Small business insurance is also known as commercial insurance and guarantees reimbursement for your startup's assets, property and finances.

Reasons why startups and small businesses need insurance:

A lot of sweat equity goes into launching a startup. Everything must function smoothly in the crucial initial days, and insurance can take care of things that cannot be planned for, such as natural disasters.
Certain types of business insurance are mandatory, and if you don't have it, you could pay steep fines or judgments. Cheap small business insurance costs much less than such fines would. The Small Business Administration mandates businesses with employees to provide workers' compensation according to their state regulations.
The Business Owners Policy requires insurers to pay the amount a startup would have made as income had there not been a natural disaster, such as an earthquake or tsunami. Startups that are forced out of business after one of these events can be compensated for lost income and wages, so this type of coverage is crucial.
Offering long-term disability insurance protects employee income in the event of a lengthy illness or recovery from an accident. This is different from workers' compensation, which covers employees injured on the job.
An "Act of God" clause in your insurance policy means an event in which there has been no human hand at work. All risk and peril-specific policies cover such events.
Health insurance is essential for attracting good employees and can be obtained through Aetna, Kaiser Permanente, or even United Healthcare. The best health insurance for small businesses will provide flexible plans for various coverage options.

Types of Insurance

1. General Liability Insurance (GLI)

GLI insures your startup against physical injury to someone else, personal injury (slander, for example), and damage to another person's belongings.

2. Commercial Property Insurance

This type of insurance works to protect your startup's physical property, including office space and equipment. However, this insurance does not cover the damage incurred because of natural disasters, for which a separate policy is required.

3. Business Income Insurance

This type of insurance works by reimbursing lost income and helps you pay for recurring everyday expenses such as rent or payroll.

4. Professional Liability Insurance

Also known as Errors and Omissions Insurance, this type of insurance compensates for inaccuracy/inadequacy in your products or services.

5. Workers' Compensation Insurance

Also required by the law of most states, this type of insurance provides benefits for employees in the form of payment for medical bills, paid leaves for recovery, and funeral costs if the death results from a work-related injury.

6. Data Breach Insurance

This type of insurance protects in the case of a breach of confidential information and covers costs for offering services that monitor identity theft for or notifying the concerned individuals.

7. Commercial Umbrella Insurance

This type of insurance works to cover the extension of coverage limits for some liability policies.

8. Commercial Auto Insurance

This type of insurance protects you and your employees if there is a physical injury or property damage while using a company vehicle. The best commercial auto insurance covers most/all adverse events involving a company vehicle.

9. Business Owners' Policy

A business owners' policy offers business owners protection in peril, property damage, business interruption, and liability. Often, additional coverage can be purchased to cover losses following a crime, damage of merchandise, and more.

Best Small Business Insurance Companies

Gusto

Description: All-inclusive payroll and HR platform that provides an array of employee benefits such as reimbursement for health-related expenses and other financial benefits.

Best for: Startups and small businesses

Pricing

The full-service Gusto HR payroll is priced at:

Core: $39 per month + $6 per month per person

Complete: $39 per month plus $12 per month per person

Concierge: $149 per month + $12 per month per person

Select: Custom pricing available

All four plans offer Gusto-brokered health insurance administration, and the Select plan offers health insurance broker integration.

Types of Insurance offered:

The following policies are offered:

Workers' Compensation Insurance, HSA, FSA, Disability Insurance, Life and Health Insurance, including Dental and Vision Insurance.

Pros:

Health insurance benefits are available at no extra cost

Cons:

The Gusto website could elaborate a bit more on its other insurance options.

Next Insurance

Description: Small business insurance that can be designed according to profession, industry, and the number of team members.

Best for: Startups and small businesses across several industries and professions

Pricing: Not disclosed publicly, but a tailored price is available according to the policies you need. An instant quote can be accessed with a click on the website after choosing your policies.

Types of Insurance offered:

The following policies are offered:

Workers' Compensation, General Liability (with an upgrade for Tools and Equipment), Professional Liability or E/O, Commercial Auto, Commercial Property, and Business Owner's Policy.

Pros:

A 10% discount is available if you buy more than one policy.
The website is elaborate so founders can easily read what they want.

Cons:

Since Next is a relatively new entrant in the market and comes with a digitized approach, founders used to traditional ways of operation may not be comfortable with it.

The Hartford

Description: Investment and financial services company with over 200 years of expertise in empowering startups and small businesses with insurance policies to scale with ease.

Best for: Startups and small businesses across industries.

Pricing: A custom quote based on the startup's zip code, number of employees, and business locations can be accessed by completing a simple form on the website.

Types of Insurance offered:

The following policies are offered:

Data Breach, Business Interruption and Income, General Liability, Commercial Auto, Professional Liability, Workers' Compensation, Kidnap, Ransom and Extortion, Business Travel Accident, and Commercial Umbrella.

Pros:

Auto insurance has high customer satisfaction ratings.
Several options are available for home and car insurance as well.
Sustainability is a part of Hartford's functional strategy to meet long-term business needs.

Cons:

Customer service could be better.

Vouch

Description: Digital insurance provider that provides startups with protection for unforeseen circumstances, mistakes, and litigation.

Best for: Early-stage startups

Pricing: Starts at $300 per year

Types of Insurance offered:

The following policies are offered:

General Liability, Business Property, Directors and Officers, Errors and Omissions, Fiduciary Liability, Employment Practices Liability, Cyber, and Crime.

Pros:

There is an option of talking to an insurance advisor on the website.
Offers next-day coverage for startups
Consolidation of all policies and renewals in one place through efficient digital management

Cons:

Since it is a recent entrant in the insurance market, it is yet to offer services in every state.

Progressive

Description: Largest commercial insurance provider catering to small businesses through various coverage options.

Best for: Startups and small businesses across industries.

Pricing: The Progressive Advantage Business Program started at $46 per month (2020) as the national average cost of a new 12-month business insurance policy. A custom quote is available based on the startup's zip code, industry-specific needs, and professions.

Types of Insurance offered:

The following policies are offered:

Apart from personal property, personal insurance, and vehicle insurance, Progressive also provides the following policies under Business insurance: Business Owner's Policy, Commercial Auto, Cyber, General Liability, Professional Liability, and Workers' Compensation.

Pros:

Flexible pricing is available by way of discounts available on insurance bundles.
Personal and business uses are covered under commercial auto insurance.

Cons:

The majority of business insurances are brokered through a third party.

Liberty Mutual Insurance

Description: Leading commercial insurance company that ranks the first in largest global surety based on GWP and NEP data.

Best for: Startups and growing businesses across several industries.

Pricing: A tailored quote is available according to your business type and needs.

Types of Insurance offered:

The following policies are offered:

The Small Business Owner's Policy covers Workers Compensation, Commercial Auto, Equipment Breakdown, Inland Marine, Umbrella, General Liability, and Commercial Property Insurance.

Pros:

Additional services like billing and premium audit are available.
Specialized solutions for property and casualty for US-based businesses are provided by Ironshore (a Liberty Mutual Company).

Cons:

The website could be a bit more comprehensive.

Berkshire Hathaway

Description: The subsidiaries of Berkshire Hathaway, Inc. offer insurance, manufacturing, energy distribution, freight rail transportation, and retailing services.

Best for: All kinds of businesses

Pricing: Not disclosed publicly

Types of Insurance offered:

The following policies are offered:

Commercial Auto, Commercial Property, Workers' Compensation, Business Owner's Policy, Commercial Umbrella, Professional Liability, Disability, Homeowners, and personal umbrella insurance.

Pros:

Flexible policy terms
Superior rating by AM Best

Cons:

Not very positive customer reviews online

State Farm

Description: Group of insurance companies functioning across the US and providing financial and banking services to startups.

Best for: Startups and small businesses across several industries

Pricing: Not disclosed publicly

Types of Insurance offered:

For small businesses, State Farm offers: Workers' Compensation, Surety and Fidelity Bonds, Builders Risk, Commercial Auto, Commercial Liability Umbrella and Business Owners Policies, Disability Insurance, Health Insurance, and Group Life Insurance for employees' wellness.

Pros:

Coverage options can be customized to a single and affordable policy
80+ years of expertise in small business insurance
Agents are business owners themselves

Cons:

There is no option to get a quote online.

Coverhound

Description: Commercial insurance provider that lets you compare quotes and several insurance providers to decide what is best for your startup.

Best for: Startups as well as established businesses

Pricing: Custom quote available based on business type and coverage options at a single click or a call (contact details mentioned on the website)

Types of Insurance offered:

Business Owner's Policy (pairing General Liability and Business Property Insurance into one policy), General Liability, Professional Liability, Workers' Compensation, Commercial Auto, Directors and Officers Insurance, Cyber Insurance, and others (Lessor's Risk, Liquor Liability, Fidelity and Crime, Umbrella, Surety).

Pros:

Coverage starts within 24 hours of buying online.
Positive customer reviews online

Founder Shield

Description: Insurance broker working with venture-backed startups and specializing in risk management by taking care of uncertain obstructions.

Best for: Early-stage, growing, and well-established businesses.

Pricing: Custom quotes are available based on the different risk management needs according to business types.

Types of Insurance offered:

Crime, Cyber Liability, Directors and Officers, Employment Practices Liability, Errors and Omissions, General Liability, Fiduciary Liability, Property Insurance, and Workers' Compensation.

Specialized coverages are also available according to risk management needs. These include: Hired and Non-Auto, ERISA Fidelity Bond, Intellectual Property, Product Liability, Representation and Warranties, Transit and Transportation, Umbrella Insurance, Virtual Care, and Telemedicine.

Pros:

Scalable tools are available, so emerging market needs are taken into account to tailor the perfect solution for your company.
Expert support is available at any time of the day or night to answer your questions regarding coverage.
Automated application process

Cons:

Despite its novel approach in terms of convenience, the pricing strategy is the same as traditional insurance options.
The provider writes your commercial insurance policy, not an insurance expert, so service is inconsistent.

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