Million Dollar Baby

Million Dollar Baby

I had one of those aha moments today while looking over some insurance numbers with Rob Mattes, our CFO (and a gentleman and a scholar).  I know it’s dangerous to think about dollars in the aggregate across years, but I’m pretty sure that by the end of this calendar year, we will have spent close to $1 million on insurance over the course of the 7 years we’ve been in business at Return Path.

I think I gagged when I realized that.  I mean, one million dollars?  Really?  How is that possible?  And how many other ways would I have rather spent that million dollars? 

Well, it all adds up — we have coverage for, among other things, E&O (errors & omissions), D&O (directors & officers), Employer Practices Liability, Fiduciary, Property & Casualty, General Liability, Employee Benefits Liability, Auto Liability, Umbrella, Business Interuption, Property, Workers Comp, 401k Fidelity Bond.  And we have two lengthy, expensive run-off policies for E&O and D&O that are legacy policies resulting from acquisitions we did along the way — to cover those companies’ prior boards for liabilities discovered after the fact for incidents that happened on their watch.

In aggregate, these policies all get us $13 million in coverage and $120,000 in deductibles, for what’s currently costing us at $250,000/year — although in a steady state, we’d only be running at about $120,000/year in expense.

I guess in the end it’s worth it, and of course I only gag because we haven’t really *needed* the insurance, but I guess that’s what insurance is for.  It really does look a little absurd when you add it all up, though. 

Maybe it’s all just part of the business getting bigger and older that I just need to suck it up and get used to.  I’m sure if I added up how much money we’ve spent on free soda, coffee, and pizza over 7 years, I’d be similarly astonished.