Nov 12, 2023

Why Small-Business Startups Need D&O Insurance

Directors and officers insurance is a coverage meant to protect the officers in your business from personal losses due to lawsuits from a third party. For small-business startups that want to go public, D&O insurance can help secure funding and attract talent.

Understanding the Risks Faced By Small-Business Startups

As a business startup, you must prove your worth to attract talent. Most candidates will not consider working for a company, particularly in a leadership or board position, without D&O coverage.

Directors and officers have to make various decisions for a company, which can open them up to potential lawsuits. Unfortunately, as a startup company, you may have limited resources to cover legal fees if they arise. As your company grows, the complexity of your decisions increases, and so does your need to hire for more leadership positions.

Exploring the Benefits of D&O Insurance for Small-Business Startups

There are typically three types of directors and officers insurance agreements, including Side A, B, and C. Side A refers to claims where the company does not have the funds to pay for indemnification. In contrast, Side B covers the losses when the company does grant indemnification. With Side B coverage, the policy reimburses the company. Side C coverage insures the company itself and its corporate assets.

D&O insurance can serve as risk mitigation for your stakeholders. Not only do you protect assets, but you enhance your business’s credibility in the market.

How Directors and Officers (D&O) Insurance Can Save a Company’s Reputation

Your company’s reputation could be at stake following a workplace safety issue or public lawsuit. Your company’s reputation is always important, but in the early years of your company, your brand image can make the difference between success and failure.

D&O coverage can help your company manage the aftermath of a safety incident. Coverage can help you with public relations efforts to protect your image and help you rebuild your brand.

Key Considerations When Choosing D&O Insurance

When choosing a D&O liability policy, evaluate the policy limits and retentions. The policy limits are the total amounts payable to the insured. The retentions are similar to deductibles; they are the amount you pay before the insurance kicks in. When considering the limits and retentions, evaluate your company’s risks and budget.

You must also choose a policy that includes the proper exclusions and endorsements. Your industry will dictate the types of endorsements you need to fill the policy gaps, along with which exclusions make sense for your business. When you work with Oakwood, our experts have knowledge in various industries. Understanding unique workplace risks allows us to create custom plans for your company.

Choose Oakwood for D&O Insurance

At Oakwood, we understand the ins and outs of management liability for startup companies. Our comprehensive D&O policies are custom-fit to suit your business’s needs. We will work with you to change your policies as your business grows and expands. Contact us to learn more about how D&O insurance can benefit your small business.


Oakwood D&O Insurance provides industry-leading insurance services, solutions, and counsel to our clients.

Our professionals are valued for their ability to provide outstanding customer service, with a commitment to the relentless pursuit of value-added solutions, results and comprehensive coverage.

Oakwood D&O at Work

One of our clients had been purchasing D&O insurance from the same carrier for several years. We looked at their tower and realized that not only was their primary carrier not A+ rated, they were also paying too much for the primary layer. We were able to move the coverage to A+ rated paper and save the client six figures.