Coverwatch, an AI-native platform transforming the commercial insurance sector, has secured $4.5 million in a pre-seed funding round. The investment was co-led by CoFound and Restive, with participation from KFund and liquid2 ventures. This capital will accelerate product development and expand the company's team to challenge the legacy industry model.
Challenging a Misaligned Brokerage Model
The commercial insurance industry has long operated on a brokerage model with an inherent conflict of interest. Brokers are typically compensated through commissions tied to premium costs, creating an incentive to favor more expensive policies. This structure has contributed to a market where U.S. companies spent over $400 billion on premiums in 2025.
This long-standing incentive problem means businesses often overpay for insurance or are left with significant gaps in their coverage. The traditional annual renewal cycle is often too slow to keep up with the evolving risks of a modern business. Coverwatch was founded to address this structural mismatch by rethinking the process from first principles.
A New Model Built on AI and Alignment
Coverwatch introduces a different approach by leveraging artificial intelligence and a transparent flat-fee structure. This model eliminates the commission-based conflict, ensuring the company's incentives are fully aligned with its clients' best interests. The platform automates complex tasks like policy analysis and benchmarking to secure optimal coverage at the best possible price.
The company's core technology maps a client's unique business risks to appropriate underwriting questions using an advanced information extraction pipeline. This system then solicits bids from over 50 carriers, a significant increase compared to traditional methods. The platform also provides proactive recommendations and hands-on claims management throughout the year, not just at renewal.
Targeted Solutions and Measurable Savings
The company focuses on businesses with complex risks, including homeowner associations (HOAs), tech firms, and scaling consumer brands. Founder and CEO Miquel Llobet's firsthand experience with insurance challenges while running an HOA management company inspired the platform's creation. This direct insight has been crucial in developing a solution that truly addresses client pain points.
The impact on clients has been significant, with Coverwatch reducing insurance costs by an average of 20 to 40 percent while closing critical coverage gaps. For its initial target market of HOAs, the platform has successfully reversed years of relentless premium increases. This success is now being replicated across other fast-growing business sectors requiring dynamic risk management.
Strategic Investment and Expansion Plans
Investor confidence in Coverwatch's mission is strong, as articulated by Jordan Wan, General Partner at CoFound. He praised the platform as a "system of intelligence for commercial insurance" that uses AI to keep coverage aligned with a business's growth. This approach provides a measurable impact by replacing outdated practices with a dynamic, client-focused solution.
With the new funding, Coverwatch plans to double its team and secure licensing in all 48 continental U.S. states by Q3 2026. The company is already licensed in 17 states and has seen its revenue double each month since Q2 2026. This rapid growth, driven by customer referrals, signals strong market demand for its innovative model.
This $4.5 million investment marks a significant milestone for Coverwatch, empowering it to scale its mission of bringing transparency to commercial insurance. By combining advanced AI with a client-first business model, the company is well-positioned for substantial growth. The planned expansion signals a new chapter for the company and a commitment to reshaping how businesses manage risk.