Directors and Officers Insurance
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Directors and officers insurance cost

The cost of directors and officers insurance (D&O) varies based on a number of factors about your business. Your premium is directly impacted by the type of work you do, the size of your business, industry risk, and more.

What is the average cost of D&O insurance?

Small businesses pay an average premium of $138 per month, or $1,653 annually, for directors and officers insurance.

Our figures are sourced from the median cost of policies purchased by Insureon customers from leading insurance companies. The median offers a better estimate of what your business is likely to pay because it excludes outlier high and low premiums.

Typical directors and officers insurance costs for Insureon customers

While Insureon's small business customers pay an average of $138 monthly for D&O insurance, 41% pay less than $100 per month for their policies, and another 25% pay between $100 and $300 monthly.

The cost varies for small businesses depending on their risks and the coverage they choose.

Monthly average cost of directors and officers insurance for Insureon customers.
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Understanding D&O insurance cost factors

Insurance companies consider several factors when determining how much to charge for a D&O insurance policy, including:

  • Number of directors on the board
  • Number of employees
  • Location
  • Company revenue
  • Industry
  • Potential for initial public offering
  • Risk profile
  • Deductible amount
  • Past claims history

How do policy limits and deductibles affect the cost of D&O insurance?

If you want a D&O policy that covers more expensive lawsuits, you’ll need to increase your coverage limits – which means you’ll pay a higher premium to your insurance company.

The limits on directors and officers insurance coverage can vary significantly. Each policy has a per-occurrence limit and an aggregate limit:

  • Per-occurrence limit. While the policy is active, the insurer will pay up to this amount to cover any single claim.
  • Aggregate limit. During the lifetime of the policy (usually one year), the insurer will pay up to this amount to cover claims.

When buying a policy, it's a good idea to make sure the deductible is something you can easily afford. If you can’t pay for it in a crisis, your insurance won’t activate to cover your claim. The average deductible that Insureon customers select for D&O insurance is $2,500.

The right amount of coverage depends on your business needs. You want coverage that will cover a potential lawsuit, without buying more than you need. Chat with a licensed insurance agent if you're unsure which deductible and limits are right for your small business or startup.

How does your industry impact the cost of directors and officers insurance?

Our analysis of D&O costs reveals that for small businesses, your industry can have a big impact on your premium.

For example, manufacturers and technology businesses typically pay more for this coverage than other industries: over $500 per month. That likely means these industries often face lawsuits related to decisions made by their boards of directors.

In contrast, nonprofits pay an average of only $67 per month for this insurance coverage.

The chart below illustrates how the type of business affects what you can expect to pay for directors and officers insurance.

Average monthly cost of directors and officers insurance for Insureon customers by industry.

D&O insurance protects your board of directors

Though it's not required by state law like workers' compensation, D&O insurance is equally important when you have a board of directors.

Each time a board member makes a decision on behalf of your business, a lawsuit is a possibility. An employee could file a wrongful termination claim, or the board of directors could be held responsible for a business's failure to comply with regulations.

When someone sues your business – even if it's a frivolous lawsuit – you'll have to pay legal defense costs, such as the cost of hiring an attorney. If you lose the suit, you could face significant financial losses in a court-ordered judgment or a settlement.

D&O insurance covers all of these costs, which could save your business from bankruptcy. It also helps attract top talent to your business, since potential candidates know their personal assets will be protected in the event of a lawsuit.

Because the premium is based upon your level of risk and your industry, many small businesses pay only a small monthly premium for this coverage.

How can you save money on D&O insurance?

Bundle policies. Many insurers offer options to purchase different types of coverage together for a discount. You can often bundle D&O coverage with other types of management liability insurance, such as employment practices liability insurance (EPLI).

Pay your entire premium upfront. While it's tempting to pay the low monthly premium, many insurance companies offer a discount when you pay the full annual premium instead.

Proactively manage your risks. A comprehensive risk management plan can help you avoid D&O claims, which helps keep your premium low. For example, you might:

  • Form internal protocols for hiring and firing employees
  • Respond promptly to claims of harassment
  • Standardize the decision-making process to ensure board decisions are well-informed
  • Institute a formal review process for important decisions

Why do small business owners choose Insureon?

Insureon is the #1 independent agency for online delivery of small business insurance.

We help business owners compare quotes from top-rated providers, buy policies, and manage coverage online. By completing Insureon’s easy online application today, you can get free quotes for directors and officers insurance and other business insurance policies from top-rated U.S. insurance companies.

Once you find the right policy for your small business, you can begin coverage in less than 24 hours and get a certificate of insurance for your small business.

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Learn more about business insurance costs

Premiums vary based on the policies a business buys. See our small business insurance cost overview or explore costs for a specific type of insurance coverage.

Updated: January 10, 2024
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