Startup Insurance Obligations Checker
Find out which insurance policies are legally mandatory for your startup — and which are strongly recommended — based on your headcount, sector, and entity type.
Mandatory once you have 10+ employees (factories) or 20+ (shops/establishments). Covers hospitalisation, maternity, disability. Employer: 3.25%, Employee: 0.75% of gross wages ≤ ₹21,000/month.
Typical cost: 3.25% of eligible wages (employer share)
Covers employer liability for work-related accidents, injuries, or death. Practically mandatory for blue-collar workers, delivery staff, warehouse teams, and field operations even if ESIC is active (ESIC exempts, but ECA liability remains).
Typical cost: ₹500–₹2,000 per employee/year depending on risk category
Mandatory once headcount reaches 20. Employer and employee each contribute 12% of basic wages. DPIIT-recognised startups can self-certify for 5 years (no government inspection), but the contribution obligation still applies.
Typical cost: 12% of basic wages (employer share)
Mandatory for establishments with 10+ employees. Payable at 15 days' salary per year of service on resignation (≥5 years) or death/disability. Purchase a Group Gratuity policy from an insurer to fund the liability.
Typical cost: Actuarially determined; typically 1–2% of payroll
Covers claims arising from errors, omissions, or negligence in professional services or software products — required by enterprise clients in contracts, and for fintech/advisory startups by regulators.
Typical cost: ₹1–5 lakh/year depending on revenue and coverage
Based on ESI Act 1948, EPF Act 1952, Payment of Gratuity Act 1972, Consumer Protection Act 2019, and CERT-In 2022 guidelines. Premium estimates are illustrative. Consult an insurance broker for actual quotes.
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Frequently asked questions
Is group health insurance mandatory for Indian startups?
Group health insurance (medical insurance for employees) is not mandatory under the Income Tax Act or Companies Act for most startups. However, if you are ESIC-registered (10+ employees, salary ≤ ₹21,000), ESIC covers hospitalisation — making private group health insurance optional for covered employees. Many investors and employees expect it as a hygiene benefit from Series A onwards.
Is Workmen's Compensation Insurance mandatory?
Under the Employees' Compensation Act 1923, employers must compensate workers for employment-related injuries or death. While the Act does not mandate purchasing insurance, the practical risk of a claim makes Workmen's Compensation Insurance (WCI) a necessity for startups with blue-collar workers, delivery riders, warehouse staff, or any field operations.
What is Directors & Officers (D&O) insurance and do startups need it?
D&O insurance protects company directors and officers against personal liability for decisions made in their official capacity — including shareholder lawsuits, regulatory investigations, and breach of fiduciary duty claims. It is not legally mandatory in India but is typically required by institutional investors (angels, VCs) as a pre-condition for investment, especially from Series A onwards.
What insurance is mandatory for a fintech or NBFC startup?
RBI-regulated NBFCs and payment aggregators are expected to have cybersecurity insurance and fidelity insurance as part of their risk management framework. Certain RBI master directions require documented insurance programs. Fintech startups also need product liability coverage and professional indemnity for financial advisory or payment failure scenarios.
Is cyber insurance mandatory for Indian startups?
Cyber insurance is not legally mandatory for most Indian startups. However, CERT-In's 2022 directions require companies to report cyber incidents and maintain audit trails — the cost of non-compliance (investigation, notification, fines) makes cyber insurance practically essential. Startups handling health data under DPDP 2023 or payment data under PCI-DSS should treat it as mandatory.