D&O Insurance for Startups: When, What, and How Much
Collated by Paul Jung, CFA
Curated by Rubric Financial
1 / 6
What D&O Actually Covers
- D&O insurance pays for legal defense + settlement costs when board members, officers, or the company itself is sued for management decisions. Coverage typically extends to wrongful acts, breach of fiduciary duty, and securities violations.
- Three coverage layers: (A) Side A covers directors/officers personally when the company can't (e.g., bankruptcy). (B) Side B reimburses the company for indemnifying its directors. (C) Side C protects the company itself in securities lawsuits.
- NOT covered: criminal acts, intentional fraud, deliberate wrongdoing. The policy covers honest mistakes + business judgment, not bad-faith conduct.
- Why this matters: serving as a director or officer of a startup IS personally risky. Without D&O, a single shareholder lawsuit can wipe out a director's personal assets.
Related Resources
What Belongs in SaaS COGS and How to Compute Gross Margin
A practical guide to defining SaaS cost of revenue and calculating gross margin correctly, including AI inference costs and benchmarks.
CFO & StrategyDunning Management: Recovering Revenue Lost to Failed Payments
How SaaS finance teams design dunning workflows that recover involuntary churn before it becomes permanent lost revenue.
CFO & StrategyAI Data Moats vs Infrastructure: Where Startups Can Win
Why competing on AI infrastructure is a losing game for startups, and how proprietary data moats create the only defensible advantage in the age of commoditized foundation models.
Related tools and reading
What Belongs in SaaS COGS and How to Compute Gross Margin
A practical guide to defining SaaS cost of revenue and calculating gross margin correctly, including AI inference costs and benchmarks.
InsightSeries A ARR Benchmarks 2026: How Much Revenue Do You Actually Need to Raise?
Median Series A ARR was $2.2M in 2025 across SaaS, but the distribution is bimodal. AI startups are closing at $500K-$1M ARR with strong growth, while traditional SaaS needs $2-3M+. Here are the real benchmarks by sector for 2026.
GlossaryD&O Insurance
Directors & Officers liability insurance that protects the company's directors and officers from lawsuits alleging wrongful acts.
Insight2026 Startup Founder Salary Report: What Seed to Series B CEOs Actually Pay Themselves
Benchmark data on founder compensation from seed through Series B, drawn from public sources including Kruze's annual survey, Pave's compensation platform, and Carta Equity Insights. Plus guidance on when and how to raise your salary.
GlossaryKey Person Insurance
Life insurance policy on a founder or critical employee where the company is the beneficiary, providing cash if they die or become disabled.
GlossaryFDIC Limits ($250K)
Federal Deposit Insurance Corporation insurance covers $250K per depositor per FDIC-insured bank per ownership category.
