Compliance
D&O Insurance
Quick definition
Directors & Officers liability insurance — protects the company's directors and officers from lawsuits alleging wrongful acts.
D&O (Directors & Officers) insurance protects board members and executives from personal liability for management decisions. Covers defense costs and settlements for shareholder lawsuits, regulatory actions, and employment claims. Standard term sheet condition for venture-funded startups: investors require D&O coverage before joining the board (typically $3-5M coverage at Series A, scaling up). Annual premium: $5K-$50K depending on stage and risk profile.
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?
- D&O (Directors & Officers) insurance protects board members and executives from personal liability for management decisions. Covers defense costs and settlements for shareholder lawsuits, regulatory actions, and employment claims. Standard term sheet condition for venture-funded startups: investors require D&O coverage before joining the board (typically $3-5M coverage at Series A, scaling up). Annual premium: $5K-$50K depending on stage and risk profile.
- 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.
Got a finance question that needs more than a definition?
Talk to a real CFO. 30 minutes, no contract, free.
