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How much should I budget for Director's Insurance for my board?

I am trying to attract some heavy hitters to my board and they will require that I have insurance to cover their exposure.

Can anyone tell me approximately what this costs per month. This is just for budgetary purposes. The board members are all in their mid-50s or early 60s.

7 Replies

Dane H. Madsen
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Dane H. Madsen Entrepreneur • Advisor
CEO, SVP Business Development | Domestic & International, Product Marketing | Open to new connections
It will depend on the industry and risk factors for that space specifically. Age is no factor here.
Jane Casey
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Jane Casey Entrepreneur
Chief Financial Officer | CFO | CFAO | M&A | Organizational Development
There are many factors that would influence the cost so you may want to have a brief discussion with an insurance broker. For example, are you family-owned or closely held? Are there any outside shareholders? What's the nature of your business? Have there been any shareholder suits? Is there a lot of M&A activity? How's your financial stability? Also, make sure you understand the three basic components of D&O insurance; your Board members will be most concerned with Side A as this covers directors and officers when the company's indemnification (e.g., in a bankruptcy) is not available to them. And, not to complicate things, but you should think about the executive coverage holistically and evaluate your need for Crime, Fiduciary (protects your 401k investment committee members), EPL (Employment Practices Liability) and K&R (Kidnap & Ransom) which might make sense if you operate in certain foreign countries.
michael burack
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michael burack Entrepreneur
president
Call a reputable insurance broker who had d&o experience
Serge Barbir
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0
Serge Barbir Entrepreneur
CEO, Benefit Experts Insurance Agency
For an early stage startup - for a $1,000,000 policy you are typically looking at around $5,000 a year. Some factors in pricing included financials, previous claims against board members... Contact our VP of Risk Management, Ryan Clarke for more answers - [removed to protect privacy].
Chicke Fitzgerald
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Chicke Fitzgerald Entrepreneur • Advisor
Game Changing Strategist, Advisor & Technologist | Board Candidate | Zigging where others Zag
Thanks all. We're an early stage tech company so there is no history. This is a new board.
Serge Barbir
0
0
Serge Barbir Entrepreneur
CEO, Benefit Experts Insurance Agency
Let me rephrase that - if one of your board members was involved with a previous claim at a prior company - that claim will follow them to your company - and could affect your pricing.
Tom DiClemente
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0
Tom DiClemente Advisor
Management Consulting | Interim CEO/COO | Coach
The price will vary by industry, or more exactly what your company does, and you should go out for quotes through several agencies. But, for a new startup, for budgeting purposes, you can expect to pay about $3000 to $5000/year.
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