Compliance
D&O Insurance
Quick definition
Liability coverage protecting board members and executives from personal liability.
Directors & Officers (D&O) insurance covers legal defense + settlement costs when board members, officers, or the company is sued for management decisions. Three sides: Side A (covers directors when company can't, e.g., bankruptcy), Side B (reimburses company for indemnifying directors), Side C (protects company in securities lawsuits). Required at Series A by most VCs as a closing condition. Premium for Series A startup with $5M coverage: $5K-15K annually. Doesn't cover criminal acts or intentional fraud.
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Frequently asked questions
- What is D&O Insurance?
- Directors & Officers (D&O) insurance covers legal defense + settlement costs when board members, officers, or the company is sued for management decisions. Three sides: Side A (covers directors when company can't, e.g., bankruptcy), Side B (reimburses company for indemnifying directors), Side C (protects company in securities lawsuits). Required at Series A by most VCs as a closing condition. Premium for Series A startup with $5M coverage: $5K-15K annually. Doesn't cover criminal acts or intentional fraud.
- Why is D&O Insurance important for startups?
- D&O Insurance is a compliance concept that matters for startup founders because it directly affects fundraising readiness, financial decision-making, or operational discipline at the stage where mistakes are expensive to undo. Founders who understand it have a meaningfully easier time in diligence, board meetings, and investor conversations.
- What category does D&O Insurance belong to?
- D&O Insurance is a Compliance term in the StartupCFO finance glossary, alongside other compliance concepts that founders, CFOs, and accountants use in daily startup operations and reporting.
- Where can I learn more about D&O Insurance?
- Beyond this definition, see the related compliance terms below, or explore StartupCFO's insights and tools that put D&O Insurance in context. For specific situations, talk to a fractional CFO who can walk through your numbers.
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