Foundational Explainer · 10 min read
D&O Insurance for Startups: What Founders, Boards, and Investors Expect
D&O protects directors, officers, and the company itself against claims arising from how the company is governed. Most startups buy D&O when they take outside investment.
About the author
Written by Amir.
Who D&O actually protects
D&O has three insuring agreements: Side A protects individual directors and officers when the company can't indemnify them; Side B reimburses the company when it does indemnify them; Side C covers the company itself for securities claims.
Right-sizing limits by round
Seed: $1M–$2M is typical for a small board with one or two outside investors. Series A: $3M–$5M; expect investors to ask about your D&O during diligence. Series B/C: $5M–$15M depending on round size and board composition. Pre-IPO: A full D&O tower with Side A DIC, often $50M+ aggregate.
Side A DIC and why it matters
Side A Difference-in-Conditions adds a layer that protects individual directors and officers when the primary policy can't or won't pay (e.g. insolvency, bankruptcy, derivative actions). It's standard for late-stage and pre-IPO companies.
Do I need D&O before I have a board?
If you've taken outside money, your investors are already exposed to potential claims as constructive directors. D&O is usually the first thing investors ask about.
Frequently asked questions
Do I need D&O before I have a board?
If you've taken outside money, your investors are already exposed to potential claims as constructive directors. D&O is usually the first thing investors ask about.
This material is general educational information, not legal, tax, or insurance advice. Coverage availability, policy terms, and regulatory requirements vary by state, carrier, and applicant.