Expanding your startup to the US is one of the most exciting milestones in a founder’s journey. You’re stepping into a huge market, tapping into new investor networks and scaling your reach globally.
But while the potential is huge, so are the risks. Insurance is one of those often-overlooked details that can make or break your expansion plans. Many founders only realise the significance of insurance when their first US client sends over a contract demanding $10 million in liability cover (while their UK policy stops at £2 million).
To help founders avoid these pitfalls, we worked with Aguila, cross-border insurance specialists who’ve helped more than 200 UK startups expand successfully into the US. Their team shared key insights on what you’ll need, what to watch out for, and how to protect your business before you land your first American deal.
Why insurance matters for your US expansion
The US is full of opportunity, but it’s also one of the most regulated and litigious business environments in the world, with both federal and (fifty) state laws to comply with. Founders expanding from the UK often underestimate how different the landscape is, despite the common language.
Most UK policies that claim ‘worldwide’ coverage actually exclude North America. Each US state has its own legal requirements and enterprise clients regularly ask for coverage limits that far exceed typical UK standards.
In other words, insurance isn’t something to sort out at the last minute. Aguila’s team recommends starting your planning three to six months before launch, so you can compare quotes, meet client requirements and avoid costly surprises.
Here’s what to expect:
Most UK policies exclude North America, even under ‘worldwide’ cover.
Workers’ compensation is legally required in all states – it’s the equivalent of employers’ liability in the UK.
Enterprise clients often expect $5–10 million in liability coverage.
Premiums are typically two to three times higher than in the UK.
Want to learn more about US expansion?
Want to learn more about US expansion? Expanding into the US involves more than just insurance. From choosing where to incorporate to hiring your first US employee, getting the foundations right early can save time, money and stress later on.
Here are three helpful SeedLegals resources to guide your next steps:
When you’re hiring your first US employee, signing your first enterprise contract, or handling customer data abroad, each type of insurance plays a specific role. Aguila’s specialists recommend reviewing these core areas early in your expansion planning.
Workers’ compensation Mandatory in most states once you hire employees. It covers workplace injuries and illnesses, ensuring compliance and protecting both employer and employee. Costs typically range from $100–500 per employee annually.
General liability Protects your company from claims of third-party injury or property damage – like public liability in the UK. This is a common requirement in client and office lease contracts. Standard coverage is between $2–5 million, and annual costs are usually $1,000–3,000 but dependent upon the nature of what you’re supplying – code or physical products.
Errors & omissions (E&O) The US equivalent of professional indemnity insurance. This policy covers claims of mistakes or failures in your work or advice, and is crucial if you’re providing services or software. UK policies often exclude ‘advice outside territorial limits,’ so founders need US-specific coverage here. Expect costs between $2,500–10,000 per year.
Cyber liability Cyber incidents are among the most common and costly risks for startups. This insurance covers both first-party damage (e.g. data loss, downtime) and third-party claims from customers affected by breaches. US data laws are stricter than GDPR and differ between states, so most enterprise contracts require at least $1–5 million in cover.
Six common pitfalls founders can avoid
Even experienced founders get caught out by US insurance complexities. Aguila’s team regularly sees these mistakes, and avoiding these early can save you time and money… and keep your expansion timeline on track.
1. Assuming your UK policy covers the US Founders often assume their existing policies apply globally. But ‘worldwide’ rarely includes the US or Canada. Always check your territorial limits before signing contracts.
2. Splitting coverage between multiple brokers Using separate UK and US brokers might seem efficient but can cause expensive overlaps, gaps or confusion during claims. Aguila recommends a single, cross-border broker to coordinate all coverage.
3. Accepting unrealistic contract requirements A $10 million insurance clause can look intimidating, but Aguila’s experience shows these are often negotiable down to $2–5 million once founders explain their risk profile.
4. Overlooking workers’ compensation Hiring without this mandatory coverage can halt operations or even result in fines. Aguila advises securing it 1–3 months before your first US hire.
5. Assuming penalties are insured Insurance doesn’t cover contractual penalties such as liquidated damages. Always negotiate these terms out or limit your liability where possible.
6. Delaying claim notifications Even minor disputes should be reported to your broker early. Waiting until a situation escalates can void your cover entirely.
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The US isn’t one market; it’s 50. Each state has its own insurance laws, employment rules and compliance requirements.
Aguila explains that founders expanding into multiple states should treat each as a mini-jurisdiction, budgeting for separate filings, workers’ compensation registrations and updates to liability coverage.
You can expect to spend an extra $2,000–5,000 per state in additional insurance costs as you scale.
Delaware: business-friendly and straightforward for incorporation.
California: stricter employment laws and higher workers’ comp costs.
New York: complex regulations and higher liability minimums.
Insurance pricing varies widely across industries and states. A remote SaaS business will pay far less than a hardware startup with on-site staff.
Understanding these costs early means you can forecast confidently, avoid delays, and keep investor due diligence smooth.
Aguila’s benchmarking data shows these typical annual costs for startups with 10–40 employees:
Coverage type
Typical cost (USD)
Workers’ comp
$1,000–5,000
General liability
$1,000–10,000
Errors & omissions
$5,000–20,000
Cyber liability
$3,000–10,000
Employment practices
$2,000–5,000
For lean startups, total insurance costs usually range between $5,000–25,000 per year, rising to $100,000 or more for multi-state operations or high-risk sectors.
Negotiating your insurance clauses
Contract insurance requirements can look daunting, but most terms are negotiable. Founders often accept boilerplate clauses by default, especially when dealing with large US clients.
Aguila’s team suggests founders can:
Push back on unrealistic coverage limits (often $10m clauses can be reduced to $2–5m).
Remove or limit liquidated damages terms, which aren’t covered by insurance.
Clarify/Limit the scope of ‘hold harmless’ and ‘additional insured’ clauses.
Allow realistic timelines for providing proof of insurance certificates.
Founders who approach these discussions collaboratively – backed by expert advice – usually find clients are flexible when coverage aligns with genuine risk.
Building your action plan
Insurance shouldn’t be an afterthought; it’s part of your expansion strategy. Planning early helps you meet investor and client requirements without slowing your growth.
Getting these steps sorted early means you can focus on growing your team and landing your first US customers, not scrambling for paperwork.
4–6 months before launch
Review your UK policies for territorial exclusions
Research insurance requirements in your target state
Get quotes for budgeting
Engage a cross-border broker
1–3 months before launch
Secure workers’ comp coverage
Obtain liability and E&O cover
Review and negotiate insurance clauses in contracts
At launch
Finalise all coverage
Brief your US team on claim procedures
Connect with US legal and employment experts
Specialist spotlight: Aguila
For UK startups expanding to the US, Aguila are cross-border insurance specialists offering coordinated UK–US coverage. Their team understands startup timelines, investor expectations and US compliance requirements, because they’ve done it themselves.
Their team have helped more than 200 startups successfully launch in the US, with dual-qualified experts based in London, Cambridge and New York , so you can work with them in your UK time-zone and it’s easy to meet in person.
Aguila work with startups at every stage of their US journey, from founders planning their first hire, to scaling teams across multiple states. They take a practical, founder-first approach to insurance, helping businesses understand what’s genuinely required, what’s negotiable, and how coverage should evolve as the company grows.
Want expert guidance?
Contact Luke Chesworth at [email protected] to map out your US insurance needs.
Planning a US expansion?
At SeedLegals, we help founders set up the right structure from day one, from creating your US entity to hiring your first team member abroad. Our experts make the legal and operational parts simple, so you can focus on winning your first US customers and growing with confidence.
