Why is it so tough to buy insurance for your tech startup?

Mark Robinson
National Sales Manager
09 May 2024
5 minute read

Insurance is probably at the bottom of your to-do list when you’re innovating, ideating, developing products or tech, facing regulatory challenges, and more. I see this every day in my role as National Sales Manager, speaking with clients and attending events.

Part of the reason for this is the archaic processes you have to juggle when trying to get cover. It can often feel like this 300-year-old industry can’t keep up the pace with tech startups.

To ease the burden, I’ve taken a quick poll of the people I’ve spoken to recently, and am addressing the most common pain points when buying insurance for a tech startup.

“Insurance takes too long”

You’re right, business insurance for your startup will take much longer than the 30 minutes or so it takes to get your car covered, or your home contents protected. But then, your business is much more complicated.

From start to finish, you’re looking at between 60 and 90 days to get your company insured or to renew your policy. But there’s good reason. Building a bespoke policy, fit for the modern age requires vast amounts of data so that insurers can adequately understand — and therefore insure — your risk.

We see this as a huge problem too. That’s why Superscript is underpinned by transparent digital processes, which can cut down the time to quote by 30 - 60%. Our digital application forms save you time by pulling in data from public sources and the digital format allows you to work with your account manager on the forms together.

We also have a client portal that will tell you how far along in your insurance journey you are — whether you’re a new client or renewing or amending your policies with us. Incidentally, you can also notify claims in the portal too.

“Insurance is too expensive”

Yep — insurance is expensive. Especially when you’re building the future with next-level, state-of-the-art tech. But insurance is there for the what-ifs.

What if someone tripped in your office or got hurt using your tech — could you pay the compensation if you were at fault? What if you accidentally infringed another company’s intellectual property — could you afford the court fees? What if your systems got hacked — could you manage the PR fallout?

With insurance, you pay for what you get. And yes, you’re paying for a worst-case scenario in the hope that you never have to use it. But if you work with the right broker, they won’t stick you on a one-size-fits-all policy, they’ll trim the fat and add the elements you need to ensure you’re paying the right amount, for the right amount of cover.

“We’ll never claim”

That’s the hope! But as they say, nothing in this life is certain other than death and taxes. I refer you back to the previous “what if” exercise. The whole point of insurance is to make a claim should the worst happen, and most insurance companies — Superscript included — want to make claims in valid cases.

Unlike many brokers, Superscript has a UK-based, in-house claims team. We’re here to ensure that making a claim is as quick and painless as possible.

You may think you don’t need insurance because your company is too small, or because your product hasn’t been released yet, or because you don’t have an office. That isn’t always the case.

Business insurance isn't mandatory outside of employee liability insurance — which in most cases is a legal requirement when you have one or more employees. But there are many times when it might be wise to consider cover. Even if you’re convinced you’re unlikely to make a claim.

“Insurance is too complicated”

You don’t need to tell me that! Insurance has a reputation for jargon and inaccessibility. As a founder, spinning so many plates already, the last thing you need to be is an insurance expert. That’s why you have a broker!

Your insurance broker should know your industry and business inside out — they should have a passion for your niche and for helping you get the best deal possible. Your broker is an extension of your team.

They are your eyes and ears in the insurance market. They’re the one who understands insurance and what covers or limits you need. That way, you can get on with raising and scaling your business, without worrying about the boring stuff.

“Endorsements and sub-limits are a problem”

Endorsements are amendments to your policy that you can make either at the time of purchase, in the middle of your policy or at renewal. They allow for more tailored cover without having to get a brand new policy.

At Superscript, if you go for a broker-led approach, endorsements come as standard because we want your policy to fit your needs. It’s not like a pair of shoes that you might grow into over time. We assess your business to see what will be right for you at the beginning of the policy term.

As your needs grow and change, so will your policy through endorsements. Policy amendments are fee-free as standard, but depending on the changes you make, your premiums may change.

Sub-limits or inner limits are limitations of liability to cover a particular type of loss. This means you have your liability limit but within that, there will be a maximum amount you can claim against certain activities. So against a £1,000,000 cyber policy, perhaps you’ll have a sub-limit of £50,000 for reputational damage claims.

As with any contract, sub-limits can be negotiated — but they’re ultimately set by the insurer that is underwriting your risk. When you’re looking for a broker, you’ll want one that has strong relationships with insurers so that you can get the cover you need.

“I’ve already got insurance”

Great! But is it right? When you’re a scaling business, things can change fast. You can go from negative revenue to drawing in over six figures very quickly. The last person you’re going to call when things are going right is your insurance broker.

Yet, we should be up there on the call list alongside your mum and your PR firm. Your policy should be checked every nine to 12 months to make sure it’s still fit for purpose. It’s not something you can renew annually without thinking.

At Superscript, we provide obligation-free insurance healthchecks to anyone who wants one. This way you can see any gaps in your cover and help you understand what protection will be important for your next stage of growth.

Problem solved

I speak to founders every day about their companies and the pain points they stumble across when getting insured. It’s no easy task to understand this complex landscape while building an idea from scratch — there are just too many moving parts.

But there is hope on the horizon. At Superscript, we see what bothers business owners and we’ve started the process to alleviate some of this burden.

Transparent, digital processes, account managers immersed in your industry, bespoke solutions — all baked in to save you time, give you flexibility and the confidence to focus on building your business. Get in touch to chat more!

This content has been created for general information purposes and should not be taken as formal advice. Read our full disclaimer.

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