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How Much Does D&O Insurance Cost? (2023 Rates)

Members of boards of directors and the officers working for companies face the risk of lawsuits from shareholders and others over their business decisions and practices. Most people won’t work as a director or officer for a company that doesn’t protect them against these types of lawsuits with directors and officers (D&O) insurance.

This article will explain how you can get D&O coverage at a fair price and its value to your business.

How much does D&O insurance cost?

Directors and officers (D&O) insurance policy prices depend on the size of your business, the number of employees, people insured, the likelihood investors and other stakeholders will sue it, and additional factors.

The median cost of directors and officers insurance, according to Insureon, is $103 per month, or $1,240 per year. (Insureon reports a median value because it better represents what you can expect to pay for D&O coverage. It doesn’t include high and low-priced outlier policies that can skew averages.)

More than one-half of small businesses — 54 percent — pay less than $1,500 per year for D&O insurance. Almost one out of five — 18 percent — pays between $1,500 and $3,000 per year. The rest spend more than $3,000 annually on D&O coverage.

These prices are relatively low, especially when compared with the possible cost of a lawsuit against your company’s leaders.

These are just the median cost. Your quotes and rates will be different. Be sure to shop around with a few companies or work with a digital broker like CoverWallet,, or to get and compare several quotes to choose the best and the cheapest one for your company.

How much does D&O insurance cost for nonprofit organizations?

The average cost for D&O insurance for nonprofit organizations without employees is around $550 a year. However, as you grow and hire more people, the D&O insurance cost will increase accordingly. For nonprofit organizations with less than 10 people, you’ll pay an average of $1,300 a year for a D&O policy. If your organization grows to close to 50 people, you may expect to pay up to $5,000 a year for the policy.

Learn more at how much nonprofit D&O insurance costs

How much does D&O insurance cost for startups?

The average cost of D&O insurance for startups is $90 per month, or $1,080 a year. Obviously this varies significantly depending on the size, the stage, and how much funding the startup has raised.

As soon as a startup receives the first funding round led by institutional investors and a formal Board is established with some external members, the startup probably needs to get their first D&O insurance policy to protect itself if their directors and officers are sued for their actions.

Learn more at why startups and small businesses need to have D&O insurance

What has the most significant impact on D&O insurance cost?

Limits and deductibles have a significant impact on D&O insurance costs.

The median limit for D&O insurance policies purchased by its customers is $1 million, and the median deductible is $1,000. Higher limits pay out more on a claim but cost more for the added coverage. Higher deductibles result in lower premium costs.

The deductible is the amount the policyholder must pay before collecting on a claim. If you choose a higher deductible, your business must always have enough cash to cover it.

What other factors affect directors and officers insurance premiums?

Other things that impact the cost of D&O coverage include:

  • Number of directors on the board
  • Number of employees
  • Business location or locations
  • Company finances
  • Likelihood of an initial public offering
  • Industry and its risk profile
  • Past claims history.

How can I save money on D&O insurance?

Below are a few practical tips to save money on your D&O insurance policy:

Manage your policy’s coverage limit and deductibles

As covered earlier, if you choose a lower D&O policy limit and a higher deductible, it will result in a lower policy cost.

Pay the entire annual premiums

Another key is paying your entire premium when you purchase your directors and officers coverage or when you renew it. You typically have the option to pay your premium in monthly or quarterly installments or once a year in total. You may be tempted by the smaller monthly or quarterly payments. However, make it a point to pay your D&O premium in total upfront. Businesses usually save money because insurers offer discounts on annual premiums.

Manage your risks

Also, carefully manage your risks. If your business has made no D&O claims in the last three years, you can expect to pay lower insurance rates. To do this, develop and implement a complete risk management plan. Some things to include in it:

  • Instructions for the proper hiring and firing of employees
  • Guidelines on how to respond to harassment claims
  • Best practices on how the board should go about making decisions
  • Information on how to conduct meetings with investors.

Ask for discounts

Also, think about whether it makes sense to purchase most or all of your business insurance from a single provider because it could save you money.

Almost all insurance companies offer multiple policies discount and other discounts that you may be eligible for. Be sure to ask for discounts when you buy D&O insurance

Shop around to compare quotes

Last but not least, different insurance companies will have different rates and quotes for you since they have different underwriting policies. Be sure to shop around with a few carriers. That can be time consuming but if you don’t, you will definitely leave money on the table. A good way to get several quotes to compare and select the cheapest one is to work with a top broker like CoverWallet,, or They represent several leading insurance companies and they can get several quotes to present to you in one screen.

What is directors and officers insurance?

Directors and officers (D&O) insurance covers the legal expenses of company board members and officers if they are sued for a decision they make on behalf of the company that results in a financial loss or if they make an error while conducting business. Legal expenses are covered even if a lawsuit is frivolous or unjustified. 

Why does a business need D&O insurance?

Any business or nonprofit organization with a board of directors should consider directors and officers insurance. It protects board members and company officers from lawsuits over decisions they make related to the business, along with oversights and errors.

If they’re sued, they could be forced to pay thousands of dollars in legal costs.

Securing this coverage protects your board members and the officers they elect or appoint. It helps your small business attract and retain top talent because they know they’re covered in case they’re sued over the business decisions they make or their business practices. If you have a board of directors or leadership team, the people on it will expect your business to carry this coverage.

Learn more why startups and small businesses need D&O insurance and why nonprofits need D&O insurance

What does D&O insurance cover?

D&O insurance protects board members from lawsuits related to:

  • Mismanaged funds
  • Employee issues
  • Slander, libel, and copyright infringement claims
  • Failure to follow organizational bylaws
  • Failure to comply with government or industry regulations

Speak with your insurance agent or representative at your insurance company to understand what is specifically covered by a D&O policy.

What are examples of things covered by D&O insurance?

Situations covered by D&O insurance include:

  • A retailer acquires a smaller competitor and loses millions of dollars because of the deal. It is eventually discovered that the board members who approved the transaction did not request critical financial information on the acquired company. When investors find out about this, the oversight results in a lawsuit.
  • Board members remove a female CEO who has helped significantly grow the business’s revenue during her time at the firm. She sues the company’s board for gender discrimination and wrongful termination.
  • Several board members at a consulting firm recommend a digital ad campaign featuring misleading statistics and information about a competitor and are later sued for libel.
  • A board member at an app development business violates the company’s non-compete clause by consulting with a competitor. The board member’s advice helps the competitor launch an app that significantly improves its market share. This causes the company’s stock price to drop by a lot. Shareholders lost millions of dollars and filed a lawsuit against the company’s board.
  • A data breach at a clinic exposes the confidential information of hundreds of patients. It turns out that the organization was not in full compliance with HIPAA rules, and patients sue the board for negligence.

These are just a few examples of situations where D&O insurance could offer company directors and officers protection if they’re sued.

Best D&O insurance companies

Hundreds of insurance companies offer D&O insurance for small businesses in all industries. It can be difficult to find the best one for your company. We have done the research and here are the top providers of D&O insurance that we recommend.

How does D&O insurance protect board members and company officers?

Your board members and officers face many of the same risks your business does, including: 

  • Lawsuits over hiring and firing decisions
  • Trademark infringement issues
  • Mismanagement of funds. 

Unlike your business, directors and officers are not protected by general liability or professional liability insurance. If they’re sued over business decisions or practices, D&O insurance can help pay attorney costs, discovery, judgments, settlements, and other expenses related to lawsuits.

What other coverages do businesses that purchase D&O insurance get?

Small business owners often choose to get D&O along with employment practices liability insurance (EPLI). EPLI can cover your legal costs if an employee sues your business over unfair hiring practices, harassment, or other violations of employee rights. 

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