AS | Ankit Sarawagi|Founder, CFOmatrix·August 2026·11 min read | Business Insurance |
Insurance is the compliance most founders defer, right until an investor makes D&O a term-sheet condition, a customer contract demands cyber cover, or a candidate asks what your health plan looks like. Buy it thoughtfully and it is cheap protection; skip it and one claim or one lost deal costs far more.
This guide sorts the covers into what to buy now, what to add as you grow, and what stays optional, with a rough sense of how much cover and what it costs. Start with the map, then open the deep guide for any policy.
- Once you raise
- D&O (usually investor-mandated) and group health to hire and retain.
- If you hold data / sign contracts
- Cyber and professional indemnity, often required by enterprise customers.
- As you add an office / goods
- Property & fire, public liability, and marine for shipments.
- Optional / nice-to-have
- Group personal accident + term, and key-person cover.
- How to buy
- Through an IRDAI-registered broker, including insurtech platforms; review it every year.
Buy these once you raise
At the point you take external money and start hiring, two covers become close to non-negotiable.
| Cover | Why now | Guide |
|---|---|---|
| D&O liability | Investors mandate it to protect their nominee director | Read → |
| Group health (GMC) | Table-stakes to hire and keep people | Read → |
| Cyber | If you hold customer data; enterprise buyers require it | Read → |
| Professional indemnity (E&O) | If you sell software or services under contracts | Read → |
Add as you grow
These follow your footprint, an office, inventory, shipments, or bigger contracts.
- Commercial general / public liability: third-party injury or damage, often asked for in leases and contracts.
- Property, fire & business interruption: your assets, plus lost income while you recover.
- Marine / transit: goods in movement, for D2C and exporters.
- Employees’ Compensation (WC): statutory liability for workers not covered by ESI.
Optional, when the budget allows
Useful, but not urgent for most early startups:
- Group personal accident + term life: inexpensive employee protection that pairs with health cover.
- Key-person insurance: covers the loss of a founder or critical leader; a few investors ask for it.
How much cover, and how to buy it
Sum insured scales with your size, your contracts and your risk, not a round number. The premium follows the cover, the limit, headcount, sector and claims history. Most startups buy through an IRDAI-registered broker, including insurtech platforms (for example Plum or Onsurity) that bundle D&O, group health and cyber and run the claims desk. Compare a broker quote against a direct one, read the exclusions and sub-limits, and keep every policy document for diligence.
Our buyer’s guide walks through indicative sums insured and cost drivers for each cover.
Your insurance checklist
- At the seed round: buy D&O (modest limit, stepped up yearly) and group health for the team.
- If you hold data or sign customer contracts: add cyber and professional indemnity.
- As you take an office, hold inventory or ship goods: add property/fire, public liability and marine.
- Add group personal accident, term and key-person cover when the budget allows.
- Buy through a broker, compare quotes, read the exclusions, and keep the documents for diligence.
- Review the whole stack once a year and after every round.
Not sure what your startup needs?
Use our free Startup Insurance Need Checker: enter your stage, team and set-up and get the covers to buy now versus later, with an indicative sum insured for each.
Check my insurance needsExplore the series
Buy once you raise
- D&O liability insurance →
- Group health insurance (GMC) →
- Cyber insurance →
- Professional indemnity (E&O) →
Add as you grow
- Commercial general / public liability →
- Property, fire & business interruption →
- Marine / transit insurance →
- Employees’ Compensation (WC) →
Optional & buying guide
FAQs
What insurance does a startup need first?
Why do investors ask for D&O insurance?
How much group health cover is standard?
Do we really need cyber insurance?
How should a startup buy insurance?
AS | Founder, CFOmatrix | Finance Strategy & Compliance CFOmatrix helps Indian startups build finance, tax and compliance functions that stand up to investor due diligence, from process and controls to the filings and the numbers behind them. |
Disclaimer: This article is general information as of August 2026 and is not insurance, legal or tax advice. Covers, sums insured, exclusions and premiums vary by insurer, sector and risk. Speak to an IRDAI-registered insurance broker before buying.