Your tech startup faces many legal and operational risks in both the digital and non-digital worlds. In the fifth article of our tech startup series, we explore the importance of Commercial General Liability Insurance and how it benefits your Web3 business at every stage of development.

Commercial General Liability: What is it?

Commercial General Liability insurance, often called CGL insurance, safeguards businesses from various potential legal liabilities. It covers claims related to bodily injury, property damage, personal and advertising injury, and other general risks that arise during normal business operations.

For instance, if someone slips and falls at your office or if damage occurs to a client’s property, CGL insurance offers financial protection. It can also covers claims of libel and slander, providing a safety net that helps manage unpredictable risks. This essential coverage ensures your business can withstand the financial impact of lawsuits and other legal claims.

When purchasing commercial general liability insurance, it is important for the business to differentiate between a claims-made policy and an occurrence policy.

A claims-made policy provides coverage for whenever a claim is made, regardless of when the claim event happened. An occurrence policy covers claims where the claim event occurred during the time of the policy even if the policy is now expired.

When should I consider Commercial General Liability?

From the very beginning, your tech startup should incorporate CGL insurance into its risk management strategy. Legal liabilities can arise at any stage of your company’s development, so securing coverage from the outset is crucial. A comprehensive CGL policy should be in place as soon as you start operations, regardless of your company’s size or stage of growth. This proactive approach protects you against the financial consequences of legal claims from the start, allowing you to focus on innovation and expansion without constant worry about potential liabilities. Working with a specialist broker can help tailor your CGL policy to match your evolving needs, ensuring adequate coverage as your business grows and changes.

Commercial General Liability: Why do tech startups need it?

Tech startups, particularly in the Web3 sector, face unique challenges and risks, making CGL insurance indispensable. They often use shared premises or co-working spaces where the liability may not be clear. As they develop and deliver innovative products and services, the exposure to legal claims increases. These claims can range from physical incidents at your premises to intellectual property disputes and marketing issues

In the fast-paced Web3 world, even minor mishaps can lead to significant legal and financial repercussions. CGL insurance offers comprehensive protection against a broad spectrum of risks, allowing you to grow your business with confidence. Given the complexities of Web3 technologies like cryptocurrencies, smart contracts, decentralized finance (DeFi), and non-fungible tokens (NFTs), startups need to consider the unique legal exposures these innovations bring. Traditional CGL policies may not fully address these risks, so working with an insurer familiar with the Web3 sector is essential.

Other Types of Policies

In addition to commercial general liability policies, businesses may also purchase policies that provide coverage for other business risks.

For example, the business may purchase employment practices liability coverage to protect itself from claims associated with sexual harassment, wrongful termination, and discrimination. It may also purchase insurance to cover Directors and Officers of the company made who are responsible for financial reporting statements, as well as coverage for damages, resulting from the actions of its directors and officers in their capacity as such.

How do Commercial General Liability and Professional Liability differ?

Commercial general liability and professional liability insurance differ primarily in the types of risks they cover. Commercial general liability protects against lawsuits from physical incidents, like a visitor slipping on your property. E&O / Professional Liability Insurance is designed to protect professionals against claims made by clients or third parties for alleged negligence, unintentional errors, or omissions in the provision of professional services. Additionally, commercial general liability sometimes includes product liability insurance, covering physical harm caused by finished work, whereas professional liability focuses solely on financial damages from provided products or services.

How can Continuum help startups?

Continuum specializes in helping tech startups navigate the complex risk management landscape in the Web3 era. Whether you’re launching your company or managing an established business, our team provides a tailored CGL insurance policy to meet your specific requirements.

We understand the unique risks faced by tech startups in the rapidly evolving Web3 space. Our expertise allows us to assess your business activities, security measures, financial controls, and other critical factors to design a policy that offers comprehensive protection.

As a boutique risk and insurance advisory firm operating in Asia, Continuum supports our clients at every stage of the insurance process. We ensure you have the right coverage, giving you peace of mind to focus on driving innovation and growth in the tech industry.

Why not give us a call or email us to set up a meeting for a free assessment of your CGL insurance needs? Let Continuum help you build a resilient foundation for your tech startup’s success.