You hit 25 employees this quarter. Somewhere in the back of your mind, you know insurance needs to change. But nobody tells you exactly when, or exactly what, until a broker calls with a quote that’s either wildly expensive or suspiciously cheap.
Here’s what I see happen at this stage: a founder gets a renewal notice, glances at the premium increase, and either signs whatever’s in front of them or ignores it because there’s a product launch this week. Neither response is wrong exactly. But both skip a step that matters figuring out what your company actually needs to protect against at 25+ employees, before you decide what to buy.
Why 25 Employees Changes Your Risk Profile
At 10 employees, your liability exposure is mostly contractual. Bad vendor terms, a messy customer contract, maybe a trademark dispute. Insurance conversations are usually just general liability and maybe E&O if you’re in professional services.
Past 25 employees, three new categories of exposure show up whether you’ve thought about them or not:
Directors and Officers exposure. You likely have a board now, or at least outside advisors with a financial stake. Every decision you make as a founder a layoff, a down round, a pivot that upset an investor creates personal liability exposure for you and anyone else making decisions on the company’s behalf. D&O coverage protects the individuals, not just the company.
Employment practices exposure. More employees means more terminations, more promotion decisions, more disputes about pay and classification. Employment Practices Liability coverage (EPLI) exists because even a meritless discrimination or wrongful termination claim costs real money to defend often tens of thousands of dollars before you ever get to a settlement conversation.
Cyber and data exposure. If you’re handling customer data, payment information, or proprietary technology at any real scale, a breach or ransomware event isn’t a hypothetical anymore. Cyber coverage is less about the breach itself and more about the cascade of costs that follow: notification requirements, forensic investigation, potential regulatory exposure.
None of this was urgent at 10 employees. All of it is relevant at 25.
Where Counsel Fits Before You Talk to a Broker
Insurance brokers are good at selling insurance. That’s their job, and it’s not a criticism. But a broker’s incentive is to get you covered, not to scope precisely what you need versus what’s being bundled in because it’s profitable to sell.
This is where legal counsel plays a different role than the broker. Before any policy conversation, we help clients answer three questions:
- What decisions is the company actually making that create D&O exposure right now? A company with a hands-on board making real governance decisions needs different coverage than one with informal advisors.
- What employment practices gaps already exist? If your termination process and documentation are weak, no EPLI policy fixes that it just means claims get more expensive to defend, not fewer.
- What data are you actually responsible for protecting? A company processing customer payment data has a different cyber exposure than one that only stores internal operational data.
Answering these first means you walk into the broker conversation asking for specific coverage, not general reassurance. That’s the difference between right-sized protection and an oversold policy that covers scenarios your business will never face.
Prepare Before the Renewal Notice, Not After
The pattern I see repeatedly: a company waits until the insurance conversation is forced by a renewal, a board member’s request, or worse, an actual claim. By then, you’re making coverage decisions under time pressure, which is exactly when oversold or under-scoped policies get signed.
The better sequence is quieter. Somewhere between 20 and 25 employees, before the renewal notice arrives, take stock of your actual governance structure, your employment documentation, and your data handling practices. That assessment is what determines what you need and it’s genuinely useful information even if you decide to wait another quarter before buying anything.
This is the same logic behind quarterly IP check-ins or reviewing employment agreements before you cross a compliance threshold. Catching the gap while it’s still a planning conversation is a fundamentally different experience than catching it during a claim.
If you’re approaching 25 employees and haven’t had this conversation yet, it’s worth having now not because insurance is urgent this week, but because knowing what you actually need changes how that renewal conversation goes.
What’s your experience been with figuring out insurance needs as your team grows? Curious what’s worked and what hasn’t.
About Garcia-Zamor: We’re the fractional general counsel for innovators protecting both your business operations and your intellectual property. Ruy Garcia-Zamor leads business growth strategy as a registered U.S. Patent and Trademark Office patent attorney, Elliott Alderman (40+ years experience) handles intellectual property, Claudia Castillo focuses on employment law, and Amulya Annasamudram (registered U.S. Patent and Trademark Office patent attorney) focuses on patents and intellectual property. Contact us at garcia-zamor.com or (410) 531-9853.
