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Partners at VC firms are exposed to personal liability. When you sit on a startup’s board, directors are expoed to personal liability. Provide offers VC firms the quickest & easiest way for VC firms to protect themselves from legal liability. Get affordable yet comprehensive coverage today.
What insurance do Venture Capital firms need?
Let’s start with a summary of the major types of covers that VC firms should have. We’ll then dive into the details for the most critical types of VC Insurance. We’ve organised a summary in an easy-to-read table below:
|Coverage||Explanation||Importance for Venture Capital firms|
|Professional Indemnity Insurance||Protects you from lawsuits related to venture capital work||Critical|
|Directors & Officers (D&O) Liability Insurance|
Protects your board directors and company officers from lawsuits personally targeting them.
E.g. VC partner who sits on a startup board getting personally sued.
|Cyber Insurance||Protects you if you suffer a cyber attack. Covers IT restoration costs, data breach liability, PDPA liability, and more.||Critical|
|Commercial Property Insurance||Protects your business premises against property damage, e.g. fire, explosions, certain types of water damage, etc.||Critical if you rent commercial spaces|
|Public Liability Insurance|
Protects you against liability to third-parties for property damage or injuries.
E.g. clients slipping & falling in your office due to you negligently leaving the floor wet.
|Good to have|
|Work Injury Compensation Insurance (WICA Insurance)||Protects your employees if they suffer work-related injuries/sickness.|
Legally required for all manual workers, or workers who earn <$2,600/month
Critical for all other worker types
Now that you have an overview of the various covers that you should have running a VC firm, let’s talk a little more about the most important of these covers. The most critical policies that VC firms should have are: i) Professional Indemnity Insurance, and ii) Directors & Officers (D&O) Liability Insurance.
Professional Indemnity Insurance protects you from a wide range of business-related lawsuits. This includes lawsuits related to negligence. VC firms can be sued by a wide variety of sources. For instance, Limited Partners (LPs) could sue the VC firm, alleging a mismanagement of funds. LPs could accuse the fund manager of negligence in allocating assets, which resulted in diminished returns for the investors. Given the high risk of investing in startups, lawsuits like these are not uncommon.
Directors & Officers Liability Insurance is also just as important. If you get sued as a VC, it’s not just your corporate entity that can be sued. The other party can come after you as a company director personally. This means your personal assets like your house, bank savings, car, etc. can be exposed to legal claims. The risk of VC partners is heightened because they sit not only on their own VC firm’s board, but also on the boards of the startups they invest in. This increases the risk of Director/Officer lawsuits significantly. It’s therefore absolutely critical that VCs carry D&O Insurance to shield their personal assets from litigation.
How much coverage do I need?
Professional Indemnity Insurance: At least $500,000 to $1 million coverage, at the bare minimum. VC funds that manage above $50 million should consider at least $3-5 million coverage, and above.
Directors and Officers Liability Insurance: At least $500,000 to $1 million coverage, at the bare minimum. VC funds that manage above $50 million should consider at least $3-5 million coverage, and above.
Cyber Insurance: At least $500,000 to $1 million coverage.
Speak with us for a more detailed assessment of required cover amounts.
How much does Venture Capital Insurance cost?
Coverage amount (example)
From $19/month, for a comprehensive Venture Capital Insurance Package deal
$10 million common law annual limit
$45,000 medical expenses cover per worker
Why use Provide for Venture Capital Insurance?
- Save up to 25% on your premiums
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