National · 5 min read
General liability insurance for startups is usually the first policy a founder buys — not because it's the most important coverage a tech company carries, but because someone else demands it. A landlord won't hand over keys without it. An enterprise customer's procurement team won't approve a vendor without a certificate. An event organizer won't let you exhibit at a conference without proof of coverage. That makes GL the entry point into business insurance for startups, and also the policy founders most often misunderstand. Here's what it actually covers, what it pointedly does not, and how to buy it without overpaying.
A general liability policy (sometimes called commercial general liability, or CGL) covers three categories of third-party claims: Bodily injury. A visitor slips in your office and breaks a wrist. A candidate trips over a cable during an onsite interview. GL pays their medical costs and defends you if they sue. Property damage. Your team damages a client's office during an onsite engagement, or your sublease neighbor's equipment is damaged by something your company did. GL responds. Personal and advertising injury. Claims of libel, slander, or copyright infringement in your advertising — for example, a competitor alleging your marketing campaign disparaged them or used their imagery. Standard limits for startups are $1 million per occurrence and $2 million aggregate, which is exactly what most leases and customer contracts specify. Policies from A-rated carriers at these limits are typically one of the cheapest line items in a startup's insurance budget — often a few hundred to low four figures per year for a pre-revenue or early-revenue software company.
This is the part that catches founders. For a tech company, the biggest risks you face are almost entirely excluded from a GL policy: Risk Covered by GL? What actually covers it Your software fails and a customer loses money No Tech E&O insurance Data breach, ransomware, stolen customer data No Cyber insurance Investor or shareholder sues your board No D&O insurance Wrongful termination or discrimination claim No EPLI Employee injured on the job No Workers' comp The pattern: GL covers physical-world accidents and a narrow slice of advertising claims. It does not cover professional failures, digital risk, or management decisions — which is where nearly all real-world losses for software companies actually happen. A concrete example. Suppose your platform goes down for two days and a customer claims $400,000 in lost revenue. Your GL policy excludes that claim entirely — there's no bodily injury and no tangible property damage. Only a tech E&O policy responds. Founders who buy GL alone and assume they're "insured" are insured against the wrong risks.