If you have recently founded your business, liquidity is a sensitive issue. If every euro is turned over twice, it is often economically nonsensical to come around the corner with a huge insurance package in this phase – depending on the business model. My rule of thumb in consulting is: we prioritize in the order in which the risk threatens your business and private existence. In the end, it is an entrepreneurial risk assessment, but of course also your personal preference that counts.
Here is a breakdown of what that can look like. Of course, every start-up is slightly different - but guide rails still help to get an idea of what to expect.
1. The Absolute Foundation: Liability Insurance
Whether solo self-employed or a young GmbH: liability insurance is practically non-negotiable. An error in the code, a missed deadline with a customer, or an accidentally violated copyright on your website can become extremely expensive - and even more so in the physical environment if someone does get hurt.
Here we need to dive briefly into the technical language, because there are a few subtleties:
General liability insurance covers personal injury and property damage, as well as resulting indirect financial loss. (Example: A customer trips in your office, gets injured, and consequently suffers a loss of earnings: this is a personal injury with indirect financial loss).
Professional indemnity insurance, also known as professional liability insurance, covers pure financial loss – i.e., purely financial disadvantages that you cause without anything being broken beforehand or anyone being injured. (Example: You give incorrect advice, and the customer misses out on a subsidy).
Anyone working in consulting or digital fields primarily needs the latter. For a deep dive into the subject, there is also my blog post on commercial liability insurance.
The cost ballpark figure: A good basic setup with well-known specialist insurers starts at around 400 euros gross per year for service providers. A coverage amount of 100,000 to 1 million euros is often sufficient for financial losses – depending entirely on the projects, the environment, and the turnover.
The hidden bonus: Every good liability insurance includes a so-called "passive legal protection". The insurer is highly motivated to ensure that you are not held liable – and will then also assist with lawyers to review this. If you are unjustifiably warned or sued, the insurance also pays for the lawyers to defend this claim. Read more about this in the deep-dive blog about liability vs. legal protection.
2. The Digital Front: Cyber Protection
Anyone building a digital product or processing customer data must deal with cyber risks. A data breach or a server hack not only ruins the reputation, but also brings massive GDPR reporting obligations with it. In this case, cyber insurance is less of a checkbook and much more of a service insurance. In an emergency, it immediately provides certified IT forensic experts and data protection lawyers via a 24/7 hotline. This operational crisis management ensures that systems are quickly up and running again and damage is minimized, without you having to search for IT service providers yourself in the middle of a crisis.
The cost ballpark figure: Here it depends more on the different components and risks - but a basic coverage for the first year can be estimated in the range of about 500 to 1,000 euros gross per year.
3. The D&O Question (Directors and Officers Liability)
Essentially: D&O insurance seems unnecessary for a young solo GmbH because you don't sue yourself as the sole shareholder. That is true for pure day-to-day business. However, the critical blind spot can be insolvency. If a start-up gets into difficulties and the management makes mistakes here, the insolvency administrator can later access private assets without limit.
The rule: As soon as significant obligations are entered into or investors are brought on board, D&O quickly becomes relevant. Important in the fine print are then tariffs in which the extremely expensive defense costs (lawyers) are not deducted from the sum insured and which offer unlimited discovery periods for later lawsuits.
The cost ballpark figure: This investment is often only made in the event of an investment, i.e. when external capital has been raised. Start-up D&O offers from specialist insurers range from 1,000 to 2,500 euros gross per year.
4. The Largest Cluster Risk: The Private Existence of the Founder
In the midst of all the business planning, the most important asset is often forgotten: the founder herself. When you transition from employee status to full-time founding, the institutional safety nets quietly disappear. Here, too, existential gaps must be closed:
Health & Income: Without an employer, continued payment of wages is omitted. If your own capacity to work fails, the business stands still. Sickness benefit is essential here - but a look at health insurance (statutory vs. private) and occupational disability or incapacity insurance should also be prioritized accordingly.
Retirement & Insolvency Protection: Those who stop paying into the statutory pension insurance scheme must take care of it themselves - and preferably not put it off for too long. Also: Retirement provision for female entrepreneurs requires a strategic separation of pure wealth accumulation (like ETFs) and real risk protection. In the worst-case scenario of insolvency, the private share portfolio is often gone – a basic pension, on the other hand, is legally protected from seizure.
You can also find more information on this in my blog post on the topic of transitioning from being an employee to founding a company.
5. What Can (Usually) Wait in the First Year
Solid risk management also means consciously saying "no". The following coverages are often offered early on, but are usually not yet absolutely necessary (unless, of course, they simply let you sleep better at night):
Business interruption insurance: As a digital founder, if you can continue working with your laptop in a café in case of doubt and survive a month without sales, you usually do not need this coverage on day 1.
Expensive corporate legal protection insurance: As mentioned above, liability insurance already fends off unjustified claims. Active legal protection usually only becomes relevant when active lawsuits must be filed (e.g. in labor disputes with the first employees).
The Next Step
If you want to know which structure makes sense for your current business model, let's talk. We review the existing situation, filter the market, and create decision templates condensed to the essentials – completely relaxed, matching the current budget, and absolutely free of sales pressure.