Author: Walker Newell
When a startup raises a Series A round, outside counsel may say: "You should think about getting some D&O insurance." An investor taking a board seat may say: "You need to get some D&O insurance so that you and I are protected if things go wrong."
At this point, most first-time founders will ask AI for an explainer on Directors and Officers (D&O) insurance. Follow the path of least resistance to getting a policy quickly in place and turn back to focusing on what matters most — scaling the company and growing revenue.
As a startup scales into a later-stage private company, the importance of D&O insurance increases.
A later-stage private company — Series C+ and/or with revenue or total funding approaching $100 million — should be thinking about D&O insurance differently than a pre-revenue startup.
For companies growing at an exponential pace, right-sizing D&O insurance isn't always the first thing that comes to mind.
When it comes to de-risking D&O exposures, expertise can be outsourced. A director of finance or head of legal at a high-growth company doesn't need to devote unnecessary time to becoming an expert in D&O risk. Companies need to make sure they're represented by specialist brokers with deep expertise in the risks fast-scaling technology companies face, and public company D&O insurance.
As companies mature and begin to think seriously about different paths to liquidity (e.g., an IPO or M&A), they should ensure, from a risk management perspective, they have a D&O insurance broker who can guide them through significant complexity. Here are some of the reasons why:
Right-sizing D&O as you scale
As we discuss in Gallagher's 2026 Guide to Private Company D&O Insurance, many early-stage venture-backed private companies buy D&O insurance limits that fall within a typical range. This decision makes sense that large claims against early-stage companies are relatively rare and the cost of limits are relatively low.
Market power and coverage terms
Experienced specialist D&O brokers have the market power and coverage expertise to draft policy terms to cover the key exposures for high-growth private companies. Generic private company policies that haven't been negotiated by D&O experts may include exclusions that are painful to discover when things go wrong.
Claims expertise
When significant issues arise, D&O need to know the policy will perform as designed to protect their personal assets. In the context of private company D&O claims — where insurers may have significant dollars at risk without much premium in the bank — strong broker advocacy can be the difference between getting legal bills paid and being stuck with out-of-pocket costs.
Public company readiness
For late-stage private companies considering a future IPO, it's optimal to structure a public company D&O program well in advance of a potential transaction. The 12-18 months leading up to an IPO is the best time to begin building relationships; with the kinds of insurance carriers who can form the foundation of your public company D&O program for years. If public listing is a future possibility, try to begin working with a specialist broker with deep experience in D&O for IPOs at the same time as you begin work on other public company readiness workstreams.
Seamless tail coverage
Many fast-growing private companies are contemplating one or two paths to exit, IPO or M&A. If the IPO path is unattractive and the company is instead acquired, a "tail policy" helps ensure directors and officers remain protected against personal liability for any post-acquisition claims. Placing tail coverage can be complex; working with an expert broker is the best way to ensure you have removed any potential overhang to your personal balance sheet.
Valuations and downside risk
At publication, optimism about AI's transformative potential is running very high. Private tech company funding rounds and valuations are also very high compared to the private market of years past. It wasn't so long ago that the creation of a private "unicorn" was notable and newsworthy. Today, new unicorns are born every week.
Periods of significant technological disruption are unpredictable and disruptive. There will be big winners from AI. There will be some companies that, despite showing great initial promise, just don't have the right timing, strategy or product-market fit during a period of significant change.
When unpredictable things happen at a company, D&O insurance should be there as a firebreak for individual directors and officers. If a company valued in the billions runs into headwinds in a fast-moving and unpredictable AI-driven business cycle, there will be risks to individual corporate leaders.
In insolvency scenarios, D&O insurance is a critical protection, therefore having expert advisors is the best way to ensure the policy performs as designed.
Buy expertise, not just insurance
When you buy D&O insurance, you're paying for an expertly placed program (coverage and pricing) and expert claims handling. Make sure your broker has deep experience helping companies navigate tricky D&O situations — and that you trust them.
Published July 2026
