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.
Related compliance terms
SOC 2 Type I vs Type II
Type I attests controls are designed correctly at a point in time; Type II attests they operated effectively over 6–12 months.
SOC 1
Attestation report focused on internal controls over financial reporting (ICFR). Relevant for vendors whose services affect customers' financial statements.
HIPAA Compliance for Startups
Healthcare Information Privacy regulation governing protected health information (PHI). Required for any startup handling patient data.
GDPR (for US Startups)
EU General Data Protection Regulation governing how you handle personal data of EU residents — even if you're a US company.
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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