Startup Insurance

Startup Insurance

Get a customized insurance policy to protect your startup business from the liabilities and risks you face.

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Insurance for startup businesses

Small businesses are significant contributors to the Canadian economy. For context, nearly 99% of companies in Canada are considered small- or medium-sized businesses. However, all small businesses began as startups. Throughout the lifecycle and growth trajectory of any startup company, a tailored insurance policy that’s designed exclusively for new and developing businesses is a must-have to ensure your survival and growth.

Startup insurance protects business owners from expensive claims such as third-party bodily injury and property damage, errors and omissions, and provides financial support if your commercial property and business contents are damaged, destroyed, or stolen.

A startup insurance policy features different types of coverages that provide comprehensive protection. Most startup insurance policies include the following coverages:

  • Commercial General Liability (CGL) Insurance: CGL provides financial support for your startup if you are subjected to a third-party bodily injury or property damage claim or lawsuit resulting from your daily operations. CGL also typically includes product liability insurance to cover you for any injuries or damages that are caused by a product you sell, distribute, or manufacture. It’s designed to provide you with funds to pay for your legal defence expenses and any compensatory awards ordered by a court.
  • Cyber Liability Insurance: Any startup that has a website, e-commerce store, a point-of-sale system, or that collects and stores its customers’ confidential and financial information needs cyber protection coverage. Designed to provide you with financial support if you are a victim of a cyber-attack, ransomware, a phishing attack, or data breach, cyber liability insurance may pay your computing system damage and restoration costs, legal and credit monitoring fees, losses sustained due to a system outage and other recovery costs.
  • Professional Liability Insurance: Commonly referred to as errors and omissions (E&O) insurance, professional liability insurance is necessary for any startup that provides professional or consulting services to its clients. It protects you from allegations of negligence, product failure, failing to deliver a service, or damage or loss to a client resulting from your services.
  • Commercial Property Insurance: Also called business contents insurance, commercial property insurance provides your startup with financial coverage for its business property, contents, electronics, and inventory if damaged or destroyed by a natural disaster or extreme weather, or by unexpected incidents like fire, flood, theft, and vandalism.
  • Directors and Officers (D&O) Insurance: If you’re aiming to court investors and raise money through venture capitalists to support and grow your startup, it’s likely you’ll be required to have D&O coverage. This type of insurance is designed to protect the members of your startup’s board of directors and the leaders in your company if named in a lawsuit alleging negligence, breach of fiduciary duties, or violation of provincial or federal law.
  • Legal Expense Insurance: Often overlooked but a necessary coverage to include to your overall startup insurance policy is legal expense insurance. If you need to hire and retain legal counsel, the cost can run into thousands of dollars quickly. Legal expense insurance is your better option. It provides startup owners with access to legal advice with experienced lawyers and it covers the cost to retain a lawyer for a wide range of issues, including tax protection, licensing protection, employment disputes, contract disputes, debt recovery and more.

As an example, a startup business may be charged approximately $450 annually for a basic commercial general liability insurance policy with a $2 million limit.

Insurance companies determine what the cost of your annual premium is based on a variety of factors. These include:

  • The type of industry you’re in and the services you provide
  • The insurance coverages you choose
  • Where your startup business is located
  • If you have employees, how many you have
  • What your annual and projected revenue is
  • What your insurance claim history shows

In addition to shopping our partner network of more than 50 insurance companies on your behalf, your Zensurance licensed broker can advise you on the coverages you need and can recommend ways you can reduce any possible risks to help lower the cost of your policy.

The startup ecosystem is incredibly diverse, and no two companies are alike. Therefore, every startup requires an insurance policy that’s customized exclusively for them.

Moreover, business insurance is not a luxury item or something you can postpone purchasing. All businesses of any size and in any industry need to be protected from the potential risks they face as an essential part of their risk management and sustainable growth strategies. A valid business insurance policy will help you grow your startup, and it is necessary if you wish to rent or lease office space, book a spot at a tradeshow, or apply for a loan.

Regardless of what type of startup business you have, startup insurance is critical.

Getting insured is quick and easy!

Complete our 5-minute online application for a free startup insurance quote.

Common claims scenarios

computer security breach

Problem: Despite the cybersecurity software and procedures you have, you suffer a cyber-attack that results in confidential data being stolen and held for ransom.

Outcome: Your cyber liability insurance coverage may pay for the repair and restoration costs to your computing systems and software as well as the ransom to get your data returned to you.

product development startup

Problem: After advising one of your clients to introduce a new product and developing it for them, the product you deliver fails to live up to expectations and results in your client suffering a financial loss. The client subsequently sues you.

Outcome: Your professional liability insurance may pay for your legal defence fees, and any financial settlement awarded to your client by the court.

break in theft

Problem: The commercial space you lease for your startup is broken into overnight, and all your computers, laptops, and other electronics are stolen.

Outcome: Your commercial property insurance may pay to replace the stolen computing equipment and electronics as well as the physical damage inflicted on your office by the burglars.

Frequently asked questions

How can a startup insurance policy support my company as I hire employees?

Once you begin to hire permanent or temporary employees, it may be necessary to enhance your existing coverage. For instance, you may wish to add commercial crime insurance to your policy, which safeguards your company from internal theft, fraud, or forgery. Or if your startup has one or more vehicles you use for business purposes, you may require commercial auto coverage. Talk to a licensed Zensurance broker to determine how you can up your coverage as you grow.

What are some steps I can take to lower the annual cost of my policy?

Conducting an annual risk assessment of your company and taking action to mitigate your risks when items are identified can help keep the cost of your policy as low as possible. Additionally, it’s wise to engage with a licensed broker and get an insurance checkup each year to ensure your coverage is sufficient as your business grows and changes. Your broker can also shop the market for you when your existing policy comes due for renewal to see if switching to a different insurer can increase your protection while decreasing the amount you pay.

How does startup insurance factor into my strategic business plan?

Startup insurance is a critical component of your strategic business plan and the backbone of your company’s risk management strategy. In essence, it helps you manage the risk of damage and loss to your startup. Assessing what your startup’s operational risks and liabilities are, is the first step toward getting the adequate protection you need and identifying any gaps in your policy. Your Zensurance licensed broker can help you do that.

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Don’t overlook the value of getting the startup insurance coverage you require. One incident, accident, or lawsuit could bankrupt your startup and put an end to it before it had the chance to grow.

Fill out an online application and answer questions about your business to get a free, non-obligatory quote. Our licensed brokers will shop the market for you, customize your policy, and provide you with the comprehensive coverage you need at the lowest price available across our network of more than 50 Canadian insurers.