When should a California startup buy D&O insurance?

The common trigger is a priced round with an investor board seat — most term sheets require it within 30–90 days of closing. But any company with outside shareholders, an active board, or growing headcount has the exposure earlier. Buying at seed is cheap relative to the protection.

Do investors really require D&O insurance?

Yes. It's a standard post-closing covenant in NVCA-style financing documents, and most institutional investors will not take a board seat without confirmation that coverage is bound. Your counsel will flag it; your investor's counsel will chase it.

How much D&O coverage does a Silicon Valley startup need?

Typical benchmarks: $1M–$2M at seed, $2M–$3M at Series A, $3M–$5M+ at Series B and beyond. The right number depends on capital raised, valuation, headcount, and sector. We benchmark against comparable portfolio companies when we quote.

Does D&O cover employment lawsuits in California?

Generally no — that's EPLI's job, which is why nearly every California startup should buy D&O and EPLI together as a management liability package. Given California's employment-litigation climate, going without EPLI here is a meaningful gap.

California · 6 min read

D&O Insurance for California Startups (Silicon Valley Founders)

For most Silicon Valley founders, the trigger for buying D&O insurance in California is a single sentence in a term sheet: the company shall obtain directors and officers liability insurance, in an amount acceptable to investors, within a set number of days after closing. Your new lead investor is about to take a board seat, and they're not taking it without a policy protecting their personal assets — or yours. OnePark Risk is a brokerage that places D&O for venture-backed startups across San Francisco, the Peninsula, and Los Angeles. Here's why D&O matters more in California than almost anywhere else, what it covers, and how to get it bound before your post-closing deadline.

Why Investors Mandate D&O at Financing

California — and Silicon Valley specifically — has the densest concentration of venture capital in the world, and the playbook around board governance is correspondingly standardized. When a fund leads your seed, Series A, or Series B, its partner joining your board becomes personally exposed to claims against the company's directors. Funds manage that exposure the same way every time: they require the portfolio company to carry D&O insurance, typically $1M–$3M at seed and $2M–$5M or more by Series A and B, bound within 30–90 days of closing. This isn't bureaucratic box-checking. D&O is the policy that responds when directors and officers are personally named — and in startup disputes, they almost always are. Without it, your company's indemnification promise to your board is only as good as your bank balance, and your own house, equity, and savings sit behind it. It also cuts the other way: founders should want D&O for themselves. If your company hits a rough stretch — a down round, a bridge that reprices early investors, a wind-down — the people most likely to be personally named are the founders who made the decisions.

What Directors and Officers Insurance Covers in California

Directors and officers insurance in California is structured in three insuring agreements: Side A protects individual directors and officers directly when the company can't indemnify them — most importantly in insolvency, which is exactly when claims tend to surface. Side B reimburses the company when it indemnifies its directors and officers, which California corporations broadly do under their charters and indemnification agreements. Side C (entity coverage) protects the company itself for securities-related claims. Covered claims for private California startups typically include shareholder and investor disputes (misrepresentation in a fundraise, breach of fiduciary duty, disputes over a down round or recap), regulatory investigations naming officers, creditor claims in distress scenarios, and competitor or counterparty suits naming individuals. For a fuller breakdown of the coverage itself, see our directors and officers insurance guide. Most startups buy D&O as part of a management liability package that includes employment practices liability insurance (EPLI) — and in California, that pairing is not optional in any practical sense.