Just released: How to raise venture capital in 2023

Download

The Business Insurance Renewal Checklist (for Startups)

TL:DR

Key Takeaways

Carl Niedbala - Founder Shield
Carl Niedbala

COO & Co-Founder

Business insurance renewals are usually uncharted territory for a young startup.  Typically, venture-backed startups experience significantly more change/growth year over year compared to your standard new business venture.  It’s important to understand how this affects your startup’s insurance coverage and how to ensure you’re properly protected.  Here’s the “checklist” of items to be aware of as your policies renew.

1. The Process

The short version: update info, receive renewal quote, renew coverage.

For startups, it’s crucial to provide your broker with a full update.  How has the company grown both the top line and the company headcount?  Are there new product lines in the market or customer segments being served?  Has the revenue or user acquisition model changed?

Due diligence is the lynchpin of the business insurance renewal process.  This information will be crucial to understand how to adjust coverage.  If a large pivot occurred, the policy will have to be updated to reflect this.  Policy limits may also have to be raised to reflect substantial growth.  All of this will become apparent once you provide updated info.

At Founder Shield, we’ve made this process easy.  Founder Shield clients simply need to log in to their account and update their info when our team sends an email reminder a couple months prior to the renewal.  When our renewals team gets notified on the back end, we evaluate, discuss, and move forward to quoting.

2. Effect on Premium

The short answer: it depends.

Premiums increase for many startups for a couple of reason.  The first reason is that the company has grown: it’s generating more revenue, hiring aggressively, moving into a bigger office, raising another round, etc.  These are all great things, but they also mean that your risk profile has grown in one way or another.  Don’t be surprised if your insurance costs increase as your company grows.

The other reasons premiums may increase are a little less obvious and more technical.  One is because a lot of policies are written on “claims-made” forms.  These forms basically increase your overall coverage period each year which usually causes the slight annual increase in premium.  More on that here.  Additionally, market factors play a role in pricing.  When it comes down to it, insurance is a financial product and responds to forces like market demand, overall losses sustained by insurers, and even general economic conditions.

3. Non-renewing

The short answer: usually not a good move.

There’s one situation in which it makes total sense to non-renew your insurance policy, and that’s an acquisition.  Even in this situation you won’t be completely non-renewing.  Rather, you’ll typically be purchasing something called “tail” coverage that gives you the ability to make a claim on the policy for several years after you’ve discontinued coverage.

If you’re simply non-renewing your insurance policies to save a few bucks, that’s not a good move for several reasons.  Obvious risk exposure aside,  it can make it tougher and more expensive to purchase new insurance down the road.


That’s the basic business insurance renewal checklist.  As you grow, it’s important that we have the right coverage in place, increase limits as appropriate, and ensure continuity of coverage.  As always reach out to our team if you have any questions.

[vc_btn title=”GET A QUOTE” style=”outline-custom” outline_custom_color=”#ee2524″ outline_custom_hover_background=”#ee2524″ outline_custom_hover_text=”#ffffff” shape=”square” size=”lg” align=”center” link=”url:https%3A%2F%2Fapp.foundershield.com%2Fusers%2Fsign_up|||”]

Related Articles

cloud outage
July 17 • Risk Management

Cloud Outage Roulette: Don’t Leave Your Startup’s Success to Chance

Cloud outages are a real threat, causing lost sales and frustrated customers. This post explores how cloud outage insurance can be a lifesaver for startups, offering financial protection and peace of mind.

insurance for generative ai
July 10 • Risk Management

Safeguard Your AI: Essential Insurance for Generative Businesses

Generative AI is on the rise, but so are the risks. Standard insurance won’t cut it. Get the scoop on specialized generative AI insurance to empower innovation without fear. We cover everything from copyright clashes to data breaches, so your business can stay protected.

digital health startup risk management
June 5 • Risk Management

How to Implement a Robust Risk Management Framework for Your Digital Health Startup

Shield your digital health startup! Discover a step-by-step guide to building a robust risk management framework. Minimize threats, ensure compliance, and empower growth.

fintech rules and regulations
April 11 • Risk Management

Fintech Rules: Regulations Finance Leaders Need to Know

Master the fintech rulebook! This post breaks down essential regulations finance leaders must understand to ensure their business operates compliantly in the ever-evolving fintech landscape.

fintech legal risks
February 29 • Risk Management

7 Legal Issues Every Fintech Should Avoid (and How to Diffuse Them!)

With the emergence of new and disruptive technologies, it’s no surprise that fintech legal risks abound for this innovative industry. Let’s break down these threats and provide solutions that will keep pace with the market.

leverage business insurance
February 27 • Risk Management

How to Leverage Your Business Insurance — 5 Tips

When was the last time you considered how to leverage your business insurance? It’s more than a safety net. In fact, this approach can give you a unique edge. Here’s how.