Liability insurance for Startups

• Cyber insurance vs tech E&O — what is the difference?

  Different failures, different plaintiffs. Tech E&O responds when your technology work fails a client — missed specs, software errors, a project that never ships. Cyber insurance responds when data or systems are compromised, paying breach response and privacy liability. Most technology businesses need both, increasingly bought as one blended policy from a single carrier.

• What does tech E&O insurance cover?

  Tech E&O covers third-party claims that your technology product or service failed someone who paid for it: negligence, failure to perform, software errors that cost a client money, and on many forms copyright and defamation claims. It does not cover bodily injury, property damage, or your own breach-response costs unless cyber coverage is attached.

• What insurance do startups need to close customer contracts?

  Usually tech E&O and cyber, plus general liability when a lease or vendor agreement demands it — but the authoritative answer is in the contract itself. Enterprise customers in B2B, SaaS, and regulated industries make E&O and cyber a condition of signature, and the certificate of insurance is effectively a closing document.

• What insurance do investors require for startups?

  D&O first — often as a condition of the round or the board seat — typically alongside general liability and cyber, with crime and key person coverage appearing when the risk profile calls for them. None of this is law: it's a closing requirement enforced by the deal and the investor's counsel, which makes it non-optional in practice.

• When should a startup consider Directors and Officers liability coverage?

  At the first priced round or the first outside board seat — whichever comes first. The consistent trigger across the startup insurance market is outside money: brokers advise binding D&O by or shortly after a priced round, and founders report investors requiring it before taking a board seat. Before that point, it's judgment rather than obligation.

Coverage mechanics for Startups

Policy mechanics, exclusions, certificates, and claims questions live on our sister publication: Startups on isthiscovered.org.