Accidents, lawsuits, and unforeseen events can disrupt your business and drain your resources. Insurance is not just a financial safeguard. It’s a shield that protects you, your employees, and your customers from the unexpected.
But where do you start? Here’s all you need to know about insurance for startups in the Netherlands.
The experts
Rodney Goijer and Fabian Groeneveld work at Rabobank. Rodney is an insurance risk specialist experienced in managing complex risks and helping startups analyze risks and find appropriate insurance policies. Fabian is a startup and scale-up banker. He connects innovative growth startups with financing options, such as Rabobank’s Innovation Loan. This article shares their insights on insurance policies for startups and scale-ups.
Business insurance in the Netherlands
Business insurance in the Netherlands is not mandatory for BVs (private limited companies). Many startup founders may overlook or delay getting insurance due to financial constraints. Fabian points out that this is a common misconception among startups: “They often underestimate their insurance needs, believing it to be unnecessary or too costly.”
Why is insurance for startups and scale-ups important?
When companies create something innovative, insurance is critical. Though ideally, nothing should happen, accidents may occur while testing a prototype or with an employee on the work floor. Rodney emphasizes: “Business insurance protects startups from unforeseen risks and provides financial stability should something happen.” So, it’s essential to think about insurance in the early stages of your startup to avoid unpleasant surprises, both budget-wise and liability-wise. Fabian adds: “If you would like to secure a startup loan, and you would like to pledge assets to do so, one of the requirements is often that the pledged assets are adequately insured.”
Key types of insurance for startups and scale-ups in the Netherlands
Are you convinced yet about the necessity of insurance policies for your startup? Even so, it can take time to determine which insurance suits best. There are many types of insurance.
Finding the right insurance can be challenging, particularly for startups that develop something new. Standard insurance sometimes provides the right coverage, but more specialized insurances are often needed.”
The most common initial insurance policies for startups and scale-ups include general liability insurance, workers’ compensation insurance, or product liability insurance when manufacturing their first product.
- General liability insurance covers legal costs and damages if your business is sued for personal injury or property damage.
- Workers’ compensation insurance covers employee injuries and non-attendance at work.
- Product liability insurance is for businesses involved in manufacturing or retailing products and is especially important if you have launched a product.
Be aware that many more insurance policies exist, such as property or cyber liability insurance.
The labyrinth of insurance policies
Many questions have probably arisen with all these different insurance policies and a unique business case. Here, Fabian and Rodney answer a few questions on finding your way into the labyrinth of startup insurance policies.
When do I start thinking about insurance for my startup?
According to Fabian, the key to avoiding potential risks and financial burdens is to start thinking about insurance as early as possible. While many startups only consider insurance when their customers ask for it, Fabian advises starting earlier. Insurance companies may require specific preventative measures for the products to provide a policy, and starting early allows for budgeting for the expenses.
Who should I get involved with to find the insurance for my startup?
While searching for and arranging insurance policies online is tempting, Rodney strongly advises against it. He recommends involving a risk expert from the beginning for startups and scale-ups. This professional can help plan to take out the right insurance at the right time, aligning this with the business strategy and growth.
How do I take out the correct insurance policy for my startup?
Many startups and scale-ups know unique risks. Rodney: “Insurers need to understand exactly what the startup does. Often, it’s not that easy to explain. Also, the nature of the activities may change quickly, for example, when transitioning from the first pilots to the first sales or when pivoting from one idea to another.” By creating a timeline and budget, next to regularly assessing the risks of the startup or scale-up, companies are more likely to pay for the right insurance at the right time.
Which insurance do I start with for my startup?
Although it differs per situation, Rodney says: “In 99% of the cases, it’s wise to start with business liability insurance. Often, the next insurance policy is employee insurance when the first hires are entering the company, which can be particularly useful when you have few employees.”
What insurance do I need if I (want to) conduct business internationally?
If you don’t have appropriate insurance, you might lose more than just your company if something goes wrong while doing business across the border. Rodney explains: “More and more startups receive funding from other countries, such as the United States. They play a different game there, with different rules and large claims that might surpass your BV and even touch your personal finances. So it’s important to reduce liability.”
How often should I check my insurance policies?
Startups and scale-ups grow quickly. Fabian: “We look at different phases of the startup or scale-up and give advice accordingly.” Depending on the speed of growth, it can be wise to re-assess your insurance twice per year or once every quarter. “At Rabobank, we keep checking in, even after the initial assessment, to ensure their policies stay current,” says Rodney.
Renset: insurance for portable battery prototypes
Renset is a startup creating portable batteries for construction sites. Teun van ‘t Veer, CEO of Renset says: “When I realized people would work with the batteries, I started thinking about insurance.” If something should happen, Teun wanted to cover these risks appropriately with his first liability insurance. He says: “In the beginning, I didn’t know where to start. No one comes up to you for small talk about insurance policies for startups. Online forms make it easy to take out insurance, but many scenarios are possible within a startup or scale-up.”
Therefore, Teun consulted with the Rabobank Startup & Scale-up team to understand more about the different options for his batteries. He explains: “There are insurance policies for almost everything, but startups and scale-ups often have to choose wisely. It is tempting to allocate that budget to other business activities, such as R&D or manufacturing. However, I’m happy we are properly insured. It’s important, and at Rabobank, we have the flexibility to balance this out and maintain security despite possible risks because we work with lithium batteries. Thanks to Rabobank, we have the right insurance every step along the way.”
Takeaways
Fabian concludes: “The most important thing is to become aware of insurance policies and that you are open to talking to us about startup insurance policies. Growth also means more risk, which should be covered accordingly, certainly in the beginning stages of a company.”
- Recognize the need to protect your startup, employees, and customers from risks.
- Do not underestimate your insurance needs; it’s essential, not a luxury.
- Think about insurance from the very beginning of your startup.
- Involve a risk expert to align insurance with your company’s growth.
- Ensure you have appropriate insurance to protect your finances in global markets.
- Re-assess insurance policies biannually or quarterly to keep them up to date.
Ready to get insured? Click here for a free finance check and get advice from Rabobank on insurance for startups and scale-ups in the Netherlands.
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