Seed-stage startup insurance: your first real programme

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

A seed round changes the shape of your company almost overnight. Last quarter you might have been two founders and a laptop. Now you're signing an office lease or a co-working membership, making your first proper hires, and — the big one — putting your name to real contracts with paying customers who have their own procurement and legal teams. Each of those milestones quietly creates an insurance obligation, and several of them arrive at the same time.

This guide walks through what a seed-stage founder should actually put in place, in roughly the order the need appears, and what to start planning for as Series A comes into view. It's written for the founder who wants to get this right once, not revisit it every time a customer sends a contract back with an insurance clause highlighted.

What insurance does a seed-stage startup actually need?

There's no single "startup policy" — your programme is a small stack of covers, each doing a specific job. At seed stage, most of the companies we work with end up with some combination of the following:

• Employers' Liability (EL) — legally required once you employ staff. This covers claims from employees who are injured or become ill because of the work they do for you.
• Professional Indemnity (PI) — covers claims that your advice, service or software caused a client a financial loss. Increasingly demanded in customer contracts.
• Public Liability (PL) — covers injury to third parties or damage to their property, relevant the moment you have an office, take visitors, or attend events.
• Cyber insurance — responds to data breaches, ransomware and business interruption from an attack. Becomes serious once you hold customer data or run a product.
• Management liability / D&O — protects directors personally against claims arising from how the company is run. Optional in law, but the board conversation usually starts around now.

You won't necessarily buy all of these on day one after the round. But you should understand which are triggered by which milestone, because the trigger is rarely a decision you make deliberately — it's a hire, a signature, or a request from someone else.

When do I legally have to have insurance?

The clearest legal line at seed stage is Employers' Liability. Under the Employers' Liability (Compulsory Insurance) Act 1969, once you employ staff you are generally required by law to hold EL insurance, with a small number of narrow exceptions (for example, some companies employing only their owner where that person holds most of the shares). The moment you take on your first employee, this stops being optional. Operating without EL cover when you should have it can expose the business to penalties, so it's worth putting in place before, not after, your first hire's start date.

A quick point that trips founders up: the rules turn on employment, not headcount. Your first single hire can trigger the requirement. It's also worth being clear-eyed about contractors versus employees — the legal test looks at the reality of the working relationship, not just the label on the agreement, so if you're relying on "they're all contractors" it's worth checking that holds up.

Beyond EL, the other seed-stage covers are not statutory requirements. They become effectively mandatory for a different reason: someone you want to do business with insists on them.

Why are my customers suddenly asking for professional indemnity?

This is the single most common trigger we see at seed stage. You land a meaningful customer — often a larger, more established one — and their contract or supplier onboarding process asks you to hold professional indemnity insurance to a stated limit, and sometimes to name them or provide a certificate. For a software or services startup, PI is the cover that sits closest to what you actually sell: it responds when a client alleges that your work, advice or product let them down and cost them money.

Two things matter here. First, the requirement usually appears with a deadline attached — the contract won't complete until you can evidence cover — so it pays to have PI in place, or at least understood, before you're mid-negotiation. Second, the limit of indemnity your customer asks for (you'll often see figures like £1m, £5m or £10m written into contracts as illustrative requirements) drives the shape of the policy you need. Those numbers are contractual demands from your customer, not a claim about what you'll ever pay out or a premium — the right limit for your business is a conversation, not a default.

Because these clauses are negotiable and the wording genuinely varies from contract to contract, this is a good moment to have a broker read the actual insurance schedule alongside you rather than guessing at what "adequate cover" means.

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

Do I need public liability once I have an office?

Public liability isn't required by law, but it becomes relevant the moment your company touches the physical world beyond your own front door. If you sign an office lease, join a co-working space, host clients on-site, or send people to conferences and events, PL covers claims from third parties who are injured or whose property is damaged in connection with your business. Landlords and co-working operators frequently ask members to carry it, and event organisers often require it as a condition of exhibiting.

For many seed-stage companies, PL is inexpensive relative to the risk it removes and is straightforward to arrange alongside EL, since both relate to your physical operations. If you're fully remote with no premises and no client visits, the case is weaker — which is exactly the kind of judgement worth talking through rather than buying by reflex.

How seriously should I take cyber at seed stage?

More seriously than most founders do. By the time you're post-seed, you're typically holding customer data, running a live product, moving money, and depending on a handful of SaaS tools that hold the keys to your business. A ransomware incident or a data breach at this stage doesn't just cost money to fix — it can stall your product, trigger notification obligations, and damage exactly the customer relationships you've just fought to win.

Cyber insurance does two useful things. It funds the response to an incident — often including access to specialists who help you contain a breach, handle notifications and recover — and it covers certain liabilities and losses that follow. For a tech or data-heavy startup, it's increasingly treated as core rather than optional, and some enterprise customers now ask about it in the same breath as PI. What good cyber cover looks like depends heavily on how you handle data and what security controls you already have in place, so the underwriting conversation doubles as a useful prompt to tighten your own basics.

Do I need D&O insurance after taking investment?

This is where founders often get the law wrong, so let's be precise: Directors' & officers' (D&O) insurance is not a legal requirement. You are never obliged by statute to hold it. What changes at seed stage is that the people around your board table start to expect it.

D&O protects directors and officers personally against claims arising from decisions they make running the company — from investors, employees, regulators or others. Once you've taken outside money and formed or expanded a board, you and any investor directors have personal exposure that didn't meaningfully exist when it was just the founders. That's why the conversation begins now. In practice, a formal requirement to carry D&O most often appears at Series A, where it's commonly written into the term sheet or investment agreement as a condition of the round. Some seed investors raise it earlier; term-sheet wording varies, so if you're negotiating a round it's worth checking what your specific documents say and taking legal input on the exact obligation.

Our steer for seed-stage founders: you don't necessarily need D&O the day after your seed round, but you should know it's coming, understand roughly what it will involve, and not be surprised when a Series A term sheet asks for it. If you'd like the detail, our guide to directors' and officers' insurance explained covers how it works and what it typically responds to.

What should I put in place now, and what can wait?

A sensible seed-stage sequence looks roughly like this. Put EL in place before your first hire starts — it's the one hard legal line. Arrange PI as soon as you're selling to customers who put insurance clauses in contracts, and ideally before you're deep in a negotiation that hinges on it. Add PL when you take on premises, a co-working space or start attending events. Treat cyber as core if you hold customer data or run a product. And keep D&O on your radar as a Series A item rather than a seed-day purchase — unless a specific investor asks for it sooner.

Two habits will save you pain later. First, tell your broker when things change — a new hire, a new office, a new product line, a jump in revenue — because your cover should track your company, not lag a year behind it. Second, don't let renewal become an afterthought; the version of your business that renews next year will look very different from the one that first bought cover, and the programme should reflect that.

If you're mapping out the whole journey, it's worth reading alongside our companion guides on the pre-seed stage and on professional indemnity insurance, both of which go deeper than we can here.

What drives the cost of a seed-stage programme?

We won't quote you a number here, because an honest one doesn't exist without knowing your business — and anyone who gives you a figure sight-unseen is guessing. What we can tell you is what underwriters actually look at. Price is shaped by what you do (a fintech handling payments is assessed very differently from a design agency), how much revenue you're generating, how many people you employ, the limits your contracts require you to carry, the sensitivity and volume of data you hold, and your claims history. Raising a limit because one big customer demands it will move the cost; so will the security controls you can evidence for cyber.

The practical takeaway: the levers that reduce your premium are often the same ones that make you a better, safer business — clean contracts, sensible data handling, and cover sized to what you genuinely need rather than a round number copied from someone else's programme.

Seed stage is the point where insurance stops being a box to tick and starts being infrastructure — quietly enabling hires, contracts and growth. Get the foundations right now and each subsequent round becomes a tune-up rather than a scramble. If you'd rather talk it through than work from a checklist, speak to an Apex specialist and we'll walk you through it, contract by contract if that's what it takes.

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.