The ABCs of D&O structure
Side A pays directors personally when the company can't indemnify them (bankruptcy). Side B reimburses the company for indemnification. Side C covers the entity itself for securities claims. Startups often buy ABC blends; the Side A-only top-up matters most when things go wrong.
- • Most VC term sheets require $1–5M D&O before closing.
- • EPLI is often bundled — employee suits are the most frequent claim.
- • M&A activity triggers 'change in control' provisions — price tail coverage early.
Related guides
Long-form playbooks on the same topic, written by the RevenueLab editorial team.
FAQ
How much does D&O insurance cost for a startup?
Seed to Series A startups typically pay $3,000–8,000/year for a $1–5M limit. Later stages with larger boards and funding rounds pay $15,000–50,000+.
Does my LLC need D&O insurance?
If you have outside investors, a board, or officers making decisions that affect others' money — yes. Solo founder-LLCs rarely need it; any governance structure with fiduciaries does.
Is D&O the same as E&O?
No. E&O covers mistakes in your professional services to clients. D&O covers management decisions — how the company is run. Growing companies typically need both.
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