Buy at milestones, not all at once
Startups rarely need a full insurance program on day one, and buying coverage without a driver wastes runway. The useful pattern is milestone-driven: each stage of company-building creates a specific requirement, and each requirement points at a specific line. Working through the milestones in order produces the program a diligent broker would design, without paying for it early.
The milestones and what they trigger
First office lease: general liability, because the landlord requires a certificate before you sign, and often property coverage for your improvements and contents. This is usually a startup's first insurance purchase.
First employee: workers' compensation, which is legally required in most states and carries steep penalties for going without. Many states count part-time roles. Founders and officers can often exclude themselves, but that is a per-state election worth making deliberately.
First customer contract: tech E&O, and cyber if the product touches customer data. This is when your product's failure starts having someone to owe, and enterprise contracts frequently make both coverages a signing condition. Buying before procurement asks keeps insurance off the deal's critical path.
First priced round: directors and officers coverage. Term sheets commonly require it as a closing condition, and incoming board members expect it before taking the seat. It protects leadership personally when suits name them over decisions running the company.
First enterprise deal or big site deployment: an umbrella policy, when the contract demands liability limits above what your primary policies carry. One umbrella limit can sit over several underlying policies, which costs less than raising each one.
Certificates of insurance, decoded
A certificate of insurance is a one-page summary proving coverage exists: lines, limits, dates, and who is named. When a landlord, customer, or site owner asks for a COI, they are usually also asking for something in the fine print, most often to be named as an additional insured on your liability policy.
Two practical notes. First, certificate requests have turnaround time, so a program placed in advance means certificates in hours rather than a scramble. Second, the requirements in a contract's insurance clause are negotiable like everything else in the contract, and it is cheaper to negotiate a limit than to buy one you don't need.
Where AI and robotics companies differ
The checklist above applies to any startup. Companies whose product is a model, an agent, or a machine carry one extra burden: the standard forms behind each line were written before their product category existed. Some carriers have begun filing AI exclusions, and generic applications have no fields for autonomy. For these companies, which form gets bound matters as much as which lines get bought, and the forms have to be read by someone who knows what to look for.
This page describes coverage in general terms. It is not an offer of insurance, and carrier appetite, policy wording, licensing, and availability govern every quote and every claim.
Common questions
- What insurance does a YC or seed-stage startup actually need?
- It depends on the milestones already passed: a lease means general liability, employees mean workers' compensation, a customer contract means tech E&O and usually cyber, and a priced round means D&O. A pre-lease, pre-revenue company often needs nothing yet.
- When should a startup buy D&O insurance?
- At or before the first priced round. Term sheets frequently require it as a closing condition and board members expect it before joining, so it is usually bound during the financing rather than after.
- What is a certificate of insurance?
- A one-page proof that coverage exists, listing lines, limits, and effective dates. Landlords, customers, and site owners request one before signing or granting access, and often ask to be named as an additional insured at the same time.
- Do pre-revenue startups need insurance?
- Only when a requirement creates the need: a lease, an accelerator agreement, a pilot contract, or an investor condition. Before any of those exist, most startups reasonably carry nothing.