Report Details Rising Coverage Costs for Startups In New Vertical Business Insurance Index

Embroker report provides startup founders a real-world snapshot of how business insurance costs and decisions shift as a company grows

San Francisco, March 30, 2021 (GLOBE NEWSWIRE) -- Embroker, the intelligent business insurance platform for vertical markets, released a new analysis that reveals premium costs can rise as much as 200% for tech startups entering the growth stage.

The report, titled The Embroker Vertical Insurance Index: Startup Snapshot, details the changes in average premiums, limits, and retentions for different lines of business insurance as companies grow. The analysis, derived from over 2,000 aggregated and anonymized Embroker transactions, is broken down by different startup funding and revenue stages. All data represents actual premiums paid and policy options chosen at the time of purchase.

Key findings from the report based on different business insurance products for founders to take note of when acquiring and evaluating their insurance policies:

  • Estimated total insurance spend by startups: Based on the average annual premium paid for core startup business insurance (D&O, EPLI, E&O and Fiduciary Liability), U.S.-based venture-backed startups are estimated to be collectively paying $739M or more in premiums every year.1
  • Directors and Officers (D&O): Venture backed startups are required to have D&O insurance, and D&O premiums can increase an average of 141% when startup funding increases from $5-25MM to $25MM and more. Annual premiums for D&O insurance can range from an average low of $4,782 to a high of $16,445, based on funding stages or revenue levels. While D&O insurance is often the most expensive, it’s the policy that protects founders and board members when claims are made against other policies. 
  • Technology Errors and Omissions (Tech E&O): Premiums for Tech E&O become higher as a company sells more products or services and increases revenue. Startups pay on average $5,285 per year for Tech E&O insurance when their revenue is less than $1MM and can pay as much as $16,679 when they hit $5MM or more in revenue. That’s a difference of $11,394 or 215%. Tech E&O is essential for startups because of the nature of their business: the efficacy of their products as well as the safety and security of digital information they handle represent substantial business risk and exposure. 
  • Employment Practices Liability Insurance (EPLI): As startups begin to grow and add more employees, their annual premiums for EPLI increase 65% on average when they have more than 30 employees. The average premium for EPLI for startups with less than 10 employees is $3,166 per year and goes up to $5,980 for startups when companies hire their 30th employee.
  • Perceived risk of different policies: Startups can indicate their perceived risk and exposure to certain business damages by the policy limits they choose. 57% of growth stage startups ($25MM+ in funding) choose less than a $3MM limit for their D&O coverage, but 48% choose a $5MM limit for Tech E&O.

“For many startups, the process of getting business insurance can be relatively opaque. Founders don't necessarily have the expertise or insight to know what type of policy they should or shouldn't be getting, and what’s the right price to pay,” said Matt Miller, Embroker CEO. “With this new report, our goal is to provide startups more transparency on the types and costs of coverage so they can make more informed decisions.”

“Companies in specialized segments like venture-backed startups have been historically under-serviced by the larger insurance companies. They have very specific sets of risks that can’t be addressed by a more general line of business insurance,” continued Miller. “Because of this unique risk, business insurance cannot be a checkbox item for growth-oriented startups – an uninformed approach to coverage will leave companies with costly exposure during critical growth stages. This specialized market need is why Embroker was founded: to provide a modern, digital solution for specific businesses and market segments, applying advanced technology to make policies more tailored, less expensive, and easier to purchase.”

The Startup Snapshot report provides more detailed information about key purchase and decision-making patterns, along with key events in a startup’s business growth that will trigger a need for more coverage.

To provide more transparency to the business insurance process, Embroker also today published a new digital tool that takes data from the report and allows founders to see insurance data that is customized to their specific startup based on their revenue and funding.

Embroker is an intelligent business insurance platform offering customized digital business insurance that tech startups, law firms, and other businesses with specialized insurance needs can quote and purchase in minutes, helping them find the optimal combination of coverage and price. Embroker applies modern data-driven underwriting models to better assess risk, and create policies and premiums that protect companies against that risk. This unique algorithmic-based risk management reduces premiums for startups by up to 20 percent. All of Embroker’s digital specialty insurance products are instantly underwritten by Embroker’s intelligent insurance platform and are fully backed by A+ rated reinsurers including Munich Re and Everest Re.

To learn more about the specific needs and costs of insurance for technology startups, download our new report and visit

About Embroker:

Embroker is transforming specialty commercial insurance by making it radically easier for businesses to get the right insurance at the best price. Focusing on industry-specific coverage for the most complex and inefficient lines of insurance, such as Directors and Officers, Employment Practices Liability, Cyber, and Professional Liability, Embroker uses smart technology powered by machine learning to fully automate underwriting and make the buying process simple, fast, and more affordable. Through Embroker Access, Embroker provides partner agencies and wholesalers the capability to offer all of Embroker’s industry-leading specialty insurance products to their customers. Founded in 2015, Embroker is headquartered in San Francisco and has raised more than $50M in funding from leading Fintech and Insurtech investors.  


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