- Directors and Officers (D&O) insurance protects the personal assets of a company's directors and officers — not the business itself — against claims of mismanagement, breach of duty, or misleading statements.
- Institutional investors increasingly require it as a condition of closing a round, because once their partner takes a board seat, that individual is personally exposed to claims.
- The most common mistake is waiting for the term sheet to mention it — underwriting takes time, and a tight closing timeline turns a routine requirement into a last-minute scramble.
- Several general insurers in India now offer D&O policies designed for startups, with premiums that scale by funding raised, sector, and board composition.
Somewhere between the term sheet and the wire transfer, a line appears that most first-time founders have never seen before: proof of Directors and Officers insurance, required before close. For many women founders, this is the first they've heard of D&O — and they hear about it with days, not weeks, to sort it out.
What D&O actually protects
D&O insurance doesn't protect your product, your revenue, or your office. It protects the people making decisions on the company's behalf — its directors and officers — from personal liability if someone later claims those decisions were negligent, misleading, or a breach of duty. That "someone" can be an investor, a former co-founder, an employee, a regulator, or a competitor.
The reason investors care so much is straightforward: the moment their partner takes a seat on your board, that individual's personal assets are exposed to exactly this kind of claim. Experienced board members — and increasingly, experienced investors — simply won't accept a board seat without it.
Protects the individual
Pays directly for a director or officer's defence and settlement costs when the company can't or won't indemnify them — the layer investors specifically want in place before they sit on your board.
Protects the company
Reimburses the company when it does indemnify its own directors and officers for a covered claim — the more common scenario in a healthy, functioning startup.
Why this catches women founders specifically off guard
D&O sits in a category of "governance infrastructure" that founders with prior institutional exposure — accelerator alumni, second-time founders, people who've watched a funding round from the investor side — tend to already know about. First-time founders building alone, without that specific institutional context, are far more likely to encounter it for the first time as a closing condition rather than something they planned for months earlier.
"My lead investor's counsel sent over the closing checklist eleven days before we were meant to wire. D&O was line four. I'd never heard the term before that email."
What it actually costs to get ahead of this
Several general insurers in India, including major private players, now offer D&O policies structured specifically for startups and small companies, with premiums that typically scale with the amount of coverage, the company's funding stage, its sector, and its board composition. Industry reporting also points to a marked rise in Indian D&O premiums over the past year, which makes early planning — rather than a rushed purchase during a closing — meaningfully cheaper as well as faster.
What to actually do
- Ask your lead investor directly what D&O limit and structure they expect, rather than guessing — term sheet language varies and vague wording is worth clarifying early.
- Start the conversation with an insurer or broker as soon as institutional fundraising conversations begin, not after a term sheet is signed.
- Understand which coverage parts you're actually buying — personal protection for individual directors, and reimbursement for the company — since board members will specifically care about the former.
- Revisit your limits at each future round, since coverage expectations typically rise as more capital and more stakeholders enter the picture.
None of this is unique to women founders — it's a standard part of institutional governance everywhere. What's specific to many first-time women founders in India is simply not having had it explained to them early, by someone who'd already been through a raise. Now you have.
This is general information about how D&O insurance typically works, not a specific coverage recommendation — terms, limits, and pricing vary by insurer and by your company's own risk profile.