Side A, Side B, Side C: The Three Parts of a D&O Policy
Every directors and officers (D&O) policy is really three insuring agreements stapled together. The "sides" decide whose money is on the line when someone sues your leadership — and that matters more than most founders realize until a board member asks about it during a financing.
| Coverage part | Who it protects | When it pays | Typical retention |
|---|---|---|---|
| Side A | Individual directors and officers, personally | When the company can't or won't indemnify them | Usually $0 |
| Side B | The company | Reimburses the company after it indemnifies its directors and officers | Yes — the policy retention applies |
| Side C | The company itself (entity coverage) | When the company is named in the claim | Yes |
For a private company — a seed-stage SaaS startup, an MSP with outside investors, a nonprofit board — all three parts normally share one limit under one "ABC" policy. For a public company, Side C is narrower (it typically covers securities claims only), but the same A/B/C logic applies.
Side A: the personal-assets layer
Side A is the part your directors actually care about. It pays defense costs, settlements, and judgments on behalf of an individual director or officer when the company doesn't indemnify them. Three situations trigger it in practice:
- The company is insolvent. A startup that runs out of runway can't pay anyone's legal bills — but creditors, investors, and a bankruptcy trustee can still sue the board for the decisions that led there.
- Indemnification is legally prohibited. Corporate law limits what a company may indemnify. Settlements of shareholder derivative suits (claims brought "on behalf of" the company against its own leaders) are the classic example: in Delaware and many other states, the company generally can't pay them for the directors.
- The company refuses. After a founder dispute, a change of control, or a board fight, new management may decline to advance defense costs to former officers.
Because Side A responds when the company can't, it usually carries no retention — the individual isn't expected to fund a deductible from personal savings.
Side B: reimbursing the company
Most bylaws and indemnification agreements obligate the company to cover its leaders' legal costs. Side B reimburses the company for that spend, above the policy retention. It is the part of the policy that pays most often in ordinary claims, because a healthy company indemnifies first and seeks reimbursement second.
Side C: entity coverage
Side C covers the company when it is named as a defendant alongside (or instead of) its directors. For private companies this is broad: investor disputes, breach-of-contract-style claims against the entity, regulatory investigations, and — depending on the form — competitor or vendor claims. It is valuable coverage, and it is also the reason Side A sometimes isn't enough on its own (see below).
The Shared-Limit Problem
Here is the risk most boards miss: in a standard ABC policy, a large entity claim under Side C can consume the limit that individuals were counting on under Side A.
A simplified example: a Series A SaaS company buys a $2M D&O limit. An investor sues the company and the board over a down-round. The company's own defense (Side C) and its indemnification of the directors (Side B) burn through $1.6M over eighteen months. When a second, derivative claim arrives — one the company is legally barred from indemnifying — only $400K is left for the directors personally.
Two policy features address this:
- Priority of payments clause. Requires the insurer to pay Side A loss before Side B or C. Most quality private-company forms include it; confirm yours does.
- Bankruptcy protections. In an insolvency, a court may treat policy proceeds as property of the bankrupt company's estate. Policies written with clear Side A priority and "estate" language reduce the chance that individual directors are frozen out while the trustee and creditors fight over the limit.
What Side A DIC Is (and Who Actually Needs It)
Side A DIC ("difference in conditions") is a separate policy that sits above your primary D&O program and is dedicated only to individual directors and officers. It does three things a standard ABC policy can't:
- Dedicated limits. Entity claims can't erode it, because the entity isn't an insured.
- Drop-down coverage. If the primary insurer denies a claim, becomes insolvent, or the primary limit is exhausted, the Side A DIC policy can drop down and respond.
- Broader terms. DIC forms are typically written with fewer exclusions and are often non-rescindable — the insurer can't void the policy for a misstatement in the application, which matters to an independent director who didn't write that application.
Who usually buys it:
| Company stage | Typical D&O structure |
|---|---|
| Pre-seed / seed | Single ABC private-company policy, often packaged with EPLI; Side A DIC rarely needed |
| Series A | ABC policy with priority-of-payments; Side A DIC sometimes requested by a lead investor's board designee |
| Series B+ / independent directors on the board | ABC primary plus a Side A DIC layer is common — independent directors frequently ask for it before joining |
| Pre-IPO / public | Public-company ABC tower plus dedicated Side A DIC layers is standard practice |
| Nonprofit boards | ABC nonprofit D&O; Side A DIC is uncommon but worth discussing for large endowments or high-profile boards |
If you are recruiting an independent director, expect the question "do we have Side A?" during diligence. Having a clear answer — and a policy summary that shows priority of payments — is part of a credible board package.
What D&O Costs (Real Quotes From Our Platform)
Across 42 D&O quotes returned on our platform between June and October 2026 (mostly $1M–$2M limits), the median annual premium was about $2,500, with the middle half of quotes falling between roughly $1,050 and $6,900. The spread is driven by revenue, funding stage, investor mix, and limit — a bootstrapped consultancy buying $1M sits at the low end; a venture-backed SaaS company buying $2M–$3M after a priced round sits at the high end. For venture-backed companies around $1–2M in revenue, our bound book shows Series A-stage D&O landing around $8,000–$10,000/yr (see what we actually charge).
A dedicated Side A DIC layer is priced separately, as excess coverage. It is generally a fraction of the primary premium per dollar of limit, because it only pays in the narrower scenarios above — but pricing is highly company-specific, so get it quoted alongside the primary rather than estimating it.
Carriers to Know
- Chubb — a market leader in private-company D&O (ForeFront Portfolio), strong priority-of-payments and Side A wording, and a deep Side A DIC appetite as companies scale.
- The Hartford — competitive private-company management liability packages for smaller and mid-size firms, often combined with EPLI and fiduciary coverage.
- Travelers, AIG, Beazley — common names on D&O towers and Side A DIC layers for later-stage and pre-IPO companies.
- Startup-focused programs — tech-oriented platforms package D&O with Tech E&O and cyber for venture-backed companies; compare their D&O wording against a traditional carrier form, especially Side A terms.
The Bundle: D&O Rarely Travels Alone
For a SaaS or tech company, D&O is one leg of a four-part program:
- D&O — investor, board, and regulatory claims against leadership (D&O for venture-backed startups)
- EPLI — employment claims, which frequently arrive alongside D&O claims after layoffs or a founder departure (D&O + EPLI bundle)
- Tech E&O — claims that your product or service failed a customer
- Cyber — breach response, ransomware, and privacy liability
Buying them together from one carrier (or a coordinated program) reduces gaps between policies — for example, a data-breach-driven shareholder suit that touches cyber, D&O, and E&O at once — and usually prices better than four standalone policies. Compare D&O, Tech E&O, and cyber quotes together.
Frequently Asked Questions
Q: What is Side A D&O insurance?
A: Side A is the part of a D&O policy that protects individual directors and officers personally when the company can't or won't indemnify them — for example, if the company is insolvent or the claim is a derivative settlement the company is legally barred from paying. It usually has no retention.
Q: What is the difference between Side A, Side B, and Side C?
A: Side A pays individuals directly when the company doesn't indemnify them. Side B reimburses the company after it indemnifies its directors and officers. Side C covers the company itself when it is named in a claim. In a private-company policy, all three typically share one limit.
Q: Do startups need Side A DIC?
A: Most seed and Series A companies are well served by a quality ABC policy with a priority-of-payments clause. Side A DIC becomes common at Series B+, when independent directors join the board, and before an IPO.
Q: Does Side A cover a company's bankruptcy?
A: Side A is designed to respond when the company is insolvent and can't indemnify its leaders. A dedicated Side A DIC policy offers stronger protection in bankruptcy because its proceeds belong to the individual insureds, not the company's estate.
Q: Is Side A coverage expensive?
A: Side A is included in a standard ABC D&O policy at no separate charge. A standalone Side A DIC layer is priced as excess coverage and is usually a fraction of the primary premium per dollar of limit, but it needs to be quoted against your company's specific profile.
