The short answer
D&O addresses covered claims alleging wrongful acts by directors and officers, and may include company coverage depending on the policy. Limits, insured persons, exclusions and transaction terms matter. The dollar ranges below are illustrative budgets, not verified market averages. Review your board’s requirements and the actual proposed wording before buying.
Use this guide to prepare questions, not to establish coverage. Any unsourced costs, limits or timing ranges are illustrative planning examples, not quotes, verified market averages or carrier commitments.
Side A, B and C, explained
| Part | Who it protects | When it pays |
|---|---|---|
| Side A | Directors and officers personally | When the company can’t or won’t indemnify them |
| Side B | The company | Reimburses the company after it indemnifies its leaders |
| Side C | The company itself | Claims against the company, often called entity coverage |
Common D&O claims against startups
- Investors alleging misrepresentation in a financing
- Disputes over a down round, dilution or an acquisition price
- Creditor claims after a company winds down
- Regulatory investigations
- Competitor or customer claims naming individual officers
What D&O usually excludes
- Fraud or illegal profit, once proven
- Claims known or pending before the policy started
- Claims between insureds, with carve-backs for some suits
- Claims by major shareholders, on some startup policies
- Bodily injury, property damage and benefit plan claims
Limits, cost and timing
Limits track capital raised and board size. StartupInsurance.ai quotes D&O with several markets so you compare exclusions, not just price. Typical limits, prices and the timeline before a closing are in D&O insurance before your round closes. Investor expectations by stage are in what investors require at each stage, and Side A excess is covered in Series B insurance and excess layers. Terms are in the startup insurance glossary.
Get a contract check
Send us your cap table and term sheet. We provide an initial written review within one business day after receiving the necessary information, with questions and next steps. Carrier quotes, coverage decisions and policy changes may take longer. Get a free contract check.
A few more answers
Frequently asked questions
Does D&O insurance cover the company itself?
Yes, on most private company policies. Side C, or entity coverage, covers claims made against the company, not just against its leaders.
Do I need D&O if I have no outside investors?
Less urgently, but founders can still be sued by customers, creditors, employees or regulators. Most companies buy it at their first priced round or board seat.
Does D&O cover employment claims against executives?
Usually only in part. Many D&O policies exclude or limit employment claims, which belong under employment practices coverage. Packages often include both, with separate or shared limits.
What is the insured vs. insured exclusion?
It excludes claims one insured brings against another, such as the company suing its own director. Carve-backs usually restore coverage for derivative suits, whistleblowers and claims by bankruptcy trustees.
Does D&O cover a dispute over a down round?
It can. Claims that directors breached their duties in a dilutive financing are classic D&O claims. Check major shareholder exclusions, which can apply when the claimant is a large investor.
General information, not a coverage determination or legal advice. Unless a specific source is identified, prices and timing ranges are illustrative planning examples—not measured market averages, quotes or guarantees. Policy wording, carrier, state and your company’s operations determine what applies.