A calm, plain‑English guide to insurance for UK technology startups, including what it covers, costs, eligibility, key risks, and practical steps to buy with confidence.
Getting protected without the guesswork
Technology startup insurance is a set of policies that protect your business from everyday risks like client disputes, data breaches, injuries to third parties, and damage to equipment. It is not about box‑ticking. It is about safeguarding cash flow, contracts, and reputation while you build. The right mix depends on what you do, how you work, and the promises you make to customers.
Across the UK, insurers are modernising quickly. The InsurTech sector is expanding fast, helped by innovation sandboxes and strong investor backing. For startups, this means faster quotes, more tailored cover, and clearer claims journeys driven by AI and better data. Markets that matter to tech firms - such as professional indemnity and cyber - are currently competitive, with broader coverages and stable pricing for companies that manage risk well.
You will not need everything on day one. But some covers are often required to trade: clients may insist on professional indemnity; regulators or landlords may require public liability; investors may expect cyber and directors’ and officers’ liability. Being underinsured can be as risky as being uninsured, especially for cyber where many UK businesses still lack adequate protection.
This guide explains how the main policies work, what they typically cover, common limitations, and how to compare options safely. It aims to help you make clear, confident decisions, using UK‑specific insights and plain English throughout.
Insurance can stabilise a young business when something goes wrong - but only if the cover matches how you actually operate.
What is covered in practice
Professional indemnity covers mistakes in your work, such as a coding error or design flaw that causes a client financial loss. It usually includes legal defence costs and settlements within the policy limit. If you handle client data, cyber insurance helps with breach response, forensics, business interruption, ransomware negotiation, and regulatory support. Public and product liability respond if a third party is injured or property is damaged due to your activities or a product you supply. Employers’ liability is a legal requirement if you have staff in the UK. Directors’ and officers’ liability protects personal assets when a director is accused of mismanagement. Portable equipment and contents cover your laptops, servers, and office kit. Business interruption can help with lost income after insured damage.
Claims follow a clear sequence: notify your insurer promptly, share documents and timelines, cooperate with appointed experts, and keep evidence of costs. Many UK insurers now use AI triage and digital portals, which can shorten claim handling and improve communication.
Limitations matter. Professional indemnity is usually on a claims‑made basis. If you cancel, you may need run‑off cover. Cyber policies often exclude pre‑existing vulnerabilities or fines that are uninsurable at law. Contractual liability beyond your negligence may not be covered. War, deliberate acts, and known defects are standard exclusions. Read sub‑limits carefully, especially for data restoration, social engineering, and business interruption.
Who benefits most
This cover is most useful for software developers, SaaS and platform providers, data and AI consultancies, IT managed service providers, UX and product designers, digital marketplaces, and hardware or IoT ventures. If you give advice, process data, connect to client networks, ship code to production, or rely on cloud infrastructure, you carry professional and cyber risks that can be significant relative to early‑stage revenue.
If you are pre‑revenue, working solo on a proof of concept, and not contracting with clients or handling personal data, you may start with minimal cover such as equipment and public liability only. As soon as you sign client agreements, pitch to enterprise buyers, hire staff, or store personal data, stronger protection becomes proportionate. Always weigh contract requirements, investor expectations, and your risk appetite.
Choosing the right level
-
Starter cover - early stage
- Professional indemnity: modest limits to satisfy small contracts.
- Public liability: for co‑working, demos, and events.
- Portable equipment: laptops and devices, including worldwide travel.
- Optional: cyber for basic incident response and phishing losses.
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Growth cover - scaling with clients
- Higher professional indemnity limits with breach of contract extensions where available.
- Cyber with incident response panel, business interruption, and social engineering sub‑limits.
- Employers’ liability for staff; directors’ and officers’ for founders and NEDs.
- Property and contents if you lease an office; business interruption for critical downtime.
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Enterprise‑ready cover - contracting with bigger buyers
- Professional indemnity at client‑mandated limits, often layered.
- Cyber with regulatory defence, ransomware support, and retainer for security testing.
- Technology errors and omissions for combined negligence and failure of service.
- Directors’ and officers’ with investigation costs and outside directorship cover.
- Optional: intellectual property infringement defence, media liability, and crime.
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Flexible add‑ons to consider
- Contract review endorsements to align with indemnity clauses.
- Overseas jurisdiction extensions if you sell into the US or EU.
- Equipment breakdown for servers and specialist electronics.
- Key person cover to protect against leadership disruption.
Start with what contracts and operations demand, then build as exposure grows.
Cost drivers and typical ranges
| Item | Typical range in the UK | What increases cost | What can reduce cost |
|---|---|---|---|
| Professional indemnity (tech) | £150 - £1,200 per year for £1m limit, micro to small firms | High contract values, US exposure, bespoke development, prior claims | Strong contracts, QA processes, clear scopes of work |
| Cyber insurance | £200 - £2,500 per year for SMEs, depending on limit and controls | Weak MFA, open RDP, sensitive data volumes, prior incidents | MFA everywhere, EDR, backups, training, vendor risk reviews |
| Public liability | £80 - £350 per year for £1m - £5m limits | Hardware installation, frequent site visits, events | Office‑based work, low footfall, good RAMS |
| Directors’ and officers’ | £150 - £800 per year for £1m limit | Fundraising, US claims exposure, financial stress | Strong governance, clean filings, audited accounts |
| Equipment cover | £100 - £450 per year for £10k - £50k sums insured | High theft areas, frequent travel, high‑value items | Asset registers, encryption, secure storage |
Pricing is competitive in 2025. Professional indemnity rates have softened, and cyber remains accessible for firms with solid controls. Treat these figures as general guidance only.
Who can apply and what insurers check
Most UK‑registered startups can apply, including limited companies and sole traders. Insurers will ask about what you build, who you sell to, your jurisdictions, revenue, and any previous claims or incidents. Cyber underwriters look closely at multi‑factor authentication, endpoint protection, access management, backups, and incident response planning. For professional indemnity, they assess project scopes, quality assurance, change control, and subcontractor oversight. They may also review standard contracts and limitation of liability clauses.
You will need basic documents: Companies House details, estimated revenue, business description, and prior insurance history. You may be declined if you have unresolved claims, unacceptable security posture, illegal data practices, or high‑risk exposures without controls. Complex US exposure or unlimited indemnities can also limit options. Being accurate and consistent on proposal forms is essential.
From quote to claim in simple steps
- List your activities, clients, jurisdictions, and must‑have contract requirements.
- Gather security details, revenue estimates, and any prior claims information.
- Get quotes online or via a broker and compare cover limits and exclusions.
- Confirm retroactive dates for professional indemnity and key sub‑limits.
- Purchase the policy and store documents with renewal reminders scheduled.
- Implement any risk improvements requested by the insurer promptly.
- If something happens, notify the insurer or broker as early as possible.
- Provide evidence and cooperate with appointed experts until closure.
Clear upsides and practical trade‑offs
| Pros | Cons / Considerations |
|---|---|
| Stabilises cash flow after incidents and legal disputes | Premiums, excesses, and limits must be budgeted and maintained |
| Improves credibility with enterprise buyers and investors | Some covers are claims‑made and require run‑off when you stop trading |
| Competitive UK market with broader terms in 2025 | Exclusions apply to contractually assumed liability and known issues |
| Faster digital claims using AI and specialist panels | Sub‑limits can restrict cyber payments for social engineering |
| Access to risk partners for training and incident response | Overseas jurisdictions, especially US, can raise costs and complexity |
| Usage‑based and embedded options support flexible scaling | Underinsurance can leave gaps if limits are too low for contracts |
Check these details before you commit
Read the schedule and wording together. Note the excess for each section, any aggregate limits, and sub‑limits for data restoration, business interruption, and social engineering. Confirm your professional indemnity retroactive date covers prior work. Review exclusions for contractual guarantees, uninsurable fines, and war or terrorism. Ask how renewal pricing may change if revenue jumps or you expand to the US. Ensure your cyber controls match the statements on your proposal. Keep copies of contracts, scopes of work, asset registers, and security policies. These reduce friction at claim time and protect against misunderstandings.
Related options that might suit better
- Management liability package - combines directors’ and officers’, employment practices liability, and commercial crime for governance risks.
- Intellectual property insurance - for defence and enforcement where patents or trademarks are core to value.
- Commercial legal expenses - for contract disputes and tax investigations where PI is not triggered.
- Hardware and transit cover - for devices, prototypes, and components in shipment or at events.
- Trade credit insurance - protects receivables if a key customer cannot pay.
Frequently asked questions
Q: Is cyber insurance still affordable given rising attacks? A: Yes, the UK market remains competitive for firms with good cyber hygiene. Controls like MFA, EDR, and tested backups are often rewarded with broader terms and stable pricing.
Q: Do I need professional indemnity if I only sell a product, not services? A: If your exposure is mainly product failure rather than advice, technology errors and omissions or product liability may be more relevant. Some firms carry both due to mixed activities.
Q: What limit should I choose for professional indemnity? A: Start with contract requirements and worst credible loss. Consider revenue at risk, remediation costs, and legal fees. Many buyers align limits to their largest single contract value.
Q: Are US sales covered by default? A: Often not. Many policies exclude US jurisdiction or charge extra. Ask for territorial and jurisdictional extensions and consider higher limits if you contract under US law.
Q: Will claims history follow me if I change insurers? A: Yes. Provide full details when you move. Keep the same retroactive date for claims‑made covers so past work remains protected.
Q: Can insurance help with regulatory investigations after a data breach? A: Cyber and directors’ and officers’ policies can include legal and response costs for investigations, subject to insurability and policy terms. Fines that are uninsurable at law will not be covered.
What you can do now
List your must‑have covers, gather basic business and security details, and compare a few reputable quotes side by side. Read wordings, not just summaries. If anything is unclear, speak to a broker who understands technology risks. Take your time. The right cover should fit your operations today and scale with you tomorrow.
Important note
This guide is general information, not personal financial advice. Policy terms and pricing vary by insurer. Always check the full wording, limits, exclusions, and conditions before buying or renewing.
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FAQs
Common questions about managing your personal finances
Begin by tracking every expense for one month. Use an app or spreadsheet. No judgment. Just observe your spending patterns.
Cancel unused subscriptions. Cook at home. Compare utility providers. Small changes add up quickly.
Aim for 20% of your income. Start smaller if needed. Consistency matters more than the amount.
Choose reputable apps with strong security. Read reviews. Check privacy policies. Protect your financial data.
Pay bills on time. Keep credit card balances low. Check your credit report annually. Be patient.
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