Insurance checklist before a funding round

Reviewed by Matthew Bartlett, Director, Apex Insurance Brokers Limited · Last reviewed 2026-08-06

A funding round has a way of turning quiet admin into urgent admin. The moment a term sheet lands, your insurance stops being a box you ticked at incorporation and becomes something investors’ lawyers pick apart line by line. The good news: getting insurance-ready is one of the most controllable parts of the whole process. Nothing here depends on market timing or a partner meeting going well — it’s just tidy preparation you can do in advance, and it makes you look like a founder who runs a tight ship.

This checklist walks through what to confirm, in roughly the order it matters, so you go into diligence with clean answers rather than open questions.

Why does insurance come up in a funding round at all?

Two reasons. First, due diligence. Investors are buying a slice of your company and its future liabilities, so their advisers will ask what protects the business if something goes wrong — an employee injury, a client dispute, a data incident, a claim against a director. Gaps, lapsed policies, or cover that doesn’t fit what you actually do all show up as risk items on a diligence report, and every open item slows the round down.

Second, conditions. Many term sheets ask you to put specific cover in place — most commonly Directors’ & Officers’ insurance — as a condition of completion or shortly after. If you’ve already thought it through, you agree quickly and move on. If you haven’t, you’re arranging cover under time pressure while the clock runs on the deal.

Larger or more complex risk? Speak directly to a director — call 0117 325 0027 or email info@apexinsurancebrokers.co.uk.

Is Employers’ Liability in place and correct?

Start here, because this one is the law. Under the Employers’ Liability (Compulsory Insurance) Act 1969, once you employ staff you must hold Employers’ Liability (EL) insurance, with only narrow exceptions — broadly, some family businesses and certain companies with a single employee who also owns most of the business. Failing to hold valid EL cover when you’re required to carries penalties, so this is not a corner to cut, and it’s exactly the kind of statutory box diligence will check.

Being “correct” means more than having a certificate somewhere. Confirm the following:

• The policy is current and the certificate is displayed or accessible to staff, as required.
• Everyone who counts as your employee is actually covered — including anyone who might be treated as an employee even though you call them a contractor.
• Head count and payroll on the policy roughly match reality; rapid hiring between renewals is easy to forget to tell your broker about.
• You can lay hands on certificates for the current year and recent past years quickly.

If you’ve grown from three people to fifteen since you last looked at this, assume it needs updating.

Does Professional Indemnity match your customer contracts?

If you sell services, advice, software or anything where a customer could argue your work caused them a loss, Professional Indemnity (PI) is usually your most important commercial cover. The trap in a funding round isn’t whether you have PI — it’s whether the PI you have lines up with what you’ve promised in your customer contracts.

Enterprise customers frequently write insurance requirements into their agreements: a minimum limit of indemnity, sometimes specific cover types, occasionally a right to see your certificate. It’s common for a fast-moving startup to sign a contract requiring, say, a £5m limit while carrying a policy with a lower one — a mismatch that’s invisible until a customer asks, or until an investor’s lawyer reads both documents side by side.

Before your round, pull your key customer contracts and check the insurance clauses against your actual policy schedule. Look at the limit, but also at the type of cover and any specific wording a contract demands. Limits like £1m, £5m or £10m are just illustrative options here — the right figure is whatever your biggest contracts oblige you to hold and what’s sensible for the work you do, not a number pulled from the air. If you’re not sure how to read a contractual insurance clause, that’s a good moment to speak to an Apex specialist rather than guess.

What gaps will investor due diligence actually find?

Diligence teams are pattern-matchers. They’ve seen a lot of young companies and they know where cover tends to be thin. Reviewing your programme through their eyes before they do is the whole point of this exercise. The gaps that come up most often:

• Cover that hasn’t kept pace with the business. You now handle customer data, ship a product, or operate in a new territory, but your policies still describe the company you were two years ago.
• Public Liability missing where you have premises, events, or people visiting your space or client sites.
• Cyber exposure where you hold personal data or your product is business-critical to customers — increasingly a standard diligence question rather than a niche one.
• Territorial and jurisdiction limits that don’t match where you actually sell, especially if you have US customers or users.
• Lapses or gaps in dates — a period where a policy quietly expired before the next one started.

You don’t necessarily need to buy every possible policy before you raise. What matters is that you can explain your cover clearly, show it’s deliberate, and flag anything you’ve consciously chosen to leave for later. A considered answer beats a comprehensive-but-confused one every time. For a wider view of how cover should evolve as you grow, our startup insurance guide maps the common exposures by stage.

How do I gather a clean claims history?

Investors want to know whether the business has a habit of getting into trouble. Your claims history is the evidence, so assemble it before anyone asks. Contact each insurer or your broker and request a written claims record — sometimes called a claims experience or claims summary — for each policy, ideally covering the last few years.

A clean record with no claims is genuinely useful and worth presenting proudly. But a claim in your history is not a red flag in itself; what matters is the story around it. If you have had a claim, be ready to explain briefly what happened, how it resolved, and what you changed afterwards. Honesty here is not optional — withholding material facts can affect a policy’s validity — and a straightforward account of a handled claim reassures investors far more than an evasive one worries them.

Practical tip: this can take a week or two to pull together across multiple insurers, so it’s one of the first things to start rather than the last.

Do I need Directors’ & Officers’ insurance before the round?

Directors’ & Officers’ (D&O) insurance protects directors and senior managers personally if they’re pursued for decisions made running the company — claims that can come from investors, regulators, employees, customers or others. To be clear, D&O is not a legal requirement. There’s no statute obliging you to hold it. What happens instead is that investors commonly require it: it’s a frequent term-sheet condition, and it tends to appear from around Series A, when a professional board and outside directors come on board and everyone wants their personal exposure covered.

The practical takeaway is to anticipate rather than react. If you expect institutional investors, assume D&O may be asked for and understand your options in advance, so that when the condition appears you can meet it quickly and on sensible terms. Because exactly what a term sheet demands varies from deal to deal, read the wording carefully and take specialist insurance and legal input on your specific clauses rather than relying on a rule of thumb. If you want to understand the cover itself in more depth, see our explainer on Directors’ & Officers’ insurance.

Putting it together: your pre-round checklist

Pulling the above into a run of concrete actions you can work through:

• Confirm Employers’ Liability is current, correctly reflects your head count, and covers everyone who should be covered; locate your certificates.
• Read the insurance clauses in your key customer contracts and check your Professional Indemnity limit, cover type and wording actually match them.
• Review every existing policy for gaps a diligence team would spot — Public Liability, cyber, territorial limits, and any lapses in dates.
• Request a written claims history from each insurer and prepare a short, honest note on anything on the record.
• Understand your D&O options ahead of time so a term-sheet condition doesn’t catch you flat-footed.
• Keep a single, tidy folder of schedules, certificates and claims records that you can hand over the moment diligence opens.

Work through that and you’ll walk into the round with the boring-but-important stuff already handled — which is exactly the impression you want to give the people about to wire you money.

Every company’s exposures are different, and the right programme depends on what you do, who your customers are, and what your investors expect. If you’d rather not second-guess it, talk to an Apex specialist and we’ll help you go into your round genuinely ready.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This article is general information, not advice on a specific policy or a recommendation to buy any product.