D&O Insurance for Startups: What Should Founders Know?

Founders should identify which entities and board members need protection. Review investor requirements before a financing closes and disclose existing disputes during underwriting.

In a startup, compare what the cap table, charter, investor agreements, and board appointments require with the actual policy. Side A/B protect eligible individuals and indemnification; Side C is limited by its own grant and may not cover every investor dispute. Check whether newly formed subsidiaries or special-purpose entities are included, how a financing or acquisition affects coverage, and whether a prior dispute is excluded. Ask about the retroactive date, insured-versus-insured clause and derivative-claim exceptions, defense-cost erosion, and shared limits with EPLI. Keep the application consistent with the company’s current ownership and governance.