Side A / B / C (D&O)
Side A, B and C are the main insuring agreements of a D&O policy. Side A protects individuals when the company cannot indemnify them, Side B reimburses the company when it does, and Side C covers the entity itself, often for securities claims.
Last updated October 13, 2026
How Side A, B and C work
D&O insurance is organized around who ends up paying. Each "side" answers a different question when a claim is made against directors and officers.
- Side A: pays directors and officers directly when the company cannot indemnify them, for example in insolvency or where law bars indemnification, or when it refuses to.
- Side B: reimburses the company after it has paid defense costs or settlements on behalf of its directors and officers. It typically carries a retention that the company bears first.
- Side C: covers the company itself when it is named in a claim. Its scope varies by policy. It is often most relevant to securities claims against public companies, and some policies limit it to those claims while others are broader. See entity coverage.
The sides sit in one policy and often share an aggregate limit, so payments under one side can reduce what remains for the others. Some companies also buy separate Side A coverage or Side A "difference in conditions" (DIC) coverage to add protection for individuals when the main program is exhausted or contested.
Example
A hypothetical start-up's investors sue its founders and the company over alleged misstatements. The company advances the founders' legal fees, and Side B reimburses it above the retention. Side C responds to the company's own defense if the policy grants entity coverage for this type of claim. If the company later runs out of cash and cannot indemnify, Side A may pay the founders directly.
What to watch for
- Shared limit: entity claims can consume the limit that individual executives are counting on.
- Entity scope: confirm whether entity coverage applies to all claims or only securities claims.
- Exclusions: the insured versus insured exclusion is a common one, so review it and its exceptions.
- Claims-made trigger: D&O is usually written on a claims-made basis, so change-of-control and wind-down events need a plan for tail coverage.
Side A, B and C vs. related terms
- Indemnification. Companies often promise in their charter, bylaws or separate agreements to indemnify directors and officers. Side B reimburses the company when it does so. Side A applies when the company does not or cannot, so it protects people instead of the balance sheet.
- Side A difference in conditions (DIC). A stand-alone Side A DIC policy sits alongside or above the main program for individuals only. It can be written on broader terms and may drop down if underlying insurance does not respond. Terms vary, so compare the triggers and exclusions.
- Entity coverage. Side C is the entity coverage in a D&O policy. See entity coverage for how its scope differs between public and private company forms.
- Other management liability lines. Employment practices liability and fiduciary liability are separate coverages that are sometimes packaged with D&O. They cover different claims, so having D&O does not mean those exposures are covered.
- Independent director liability. Some insurers offer coverage aimed at independent directors only. It is another way to add individual protection, and it differs from standard Side A in who is insured and how limits are shared.
Second example: when the company cannot indemnify
A hypothetical late-stage company faces a shareholder suit and a derivative claim on behalf of the company. Entity defense costs and the company's reimbursed costs draw heavily on a shared limit. In a derivative claim, the company may be legally restricted in some places from indemnifying directors for amounts paid in settlement, so the directors need direct protection. Side A is designed for that situation. Meanwhile the company's finances worsen and it can no longer advance fees. If the shared limit is nearly used up, a separate Side A limit or a Side A DIC policy could still respond for the individuals, subject to its terms. If there is no such layer, the directors may face the claim with little left to draw on.
Questions to ask your broker or underwriter
- Are the limits shared across all sides, or is there a dedicated Side A limit?
- Does the policy have an order of payments clause that gives individuals priority when the limit is shared?
- What are the retentions for each side, and is there no retention under Side A?
- Does entity coverage apply to all claims or only to securities claims, and how are defense costs allocated between the company and individuals?
- What is the trigger for a Side A DIC policy to drop down, and which exclusions differ from the primary?
- Who counts as an insured, including outside directors, investor designees and employees named in a claim, and how does the policy coordinate with insurance held by investor funds?
- How do severability and non-rescindable terms protect individuals if there is a problem with the application?
- If the company is sold or closes, does the policy convert to run-off and for how long?
Each side responds to a wrongful act, as the policy defines it, so check that definition along with the sides.
Why it matters for technology, AI, fintech and digital-asset companies
Venture-backed founders and board members, including investor designees, often ask how their personal assets are protected if the company fails or a claim arises. Understanding Side A versus B and C helps companies structure limits and decide whether extra Side A protection makes sense. See our Directors & Officers coverage page.
Founders, investor designees and independent directors often share one D&O program, and they can end up with different needs. Private-company policies commonly give broader entity coverage than public-company forms, which makes the shared-limit question more pressing because entity claims can draw on the same limit as individuals. Fintech and digital-asset companies should read regulatory and investigation terms and ask whether any exclusions or sublimits apply to their activities. Whether to add dedicated Side A limits usually comes up at financing rounds and before an exit. See the digital assets page for sector context.
See how this applies in practice: D&O insurance for startups and startup insurance by stage.
Related terms
Related coverage
Frequently asked questions
What are Side A, Side B and Side C in D&O insurance?
Side A, B and C are the main insuring agreements of a D&O policy. Side A protects individuals when the company cannot indemnify them, Side B reimburses the company when it does, and Side C covers the entity itself, often for securities claims.
What is Side A coverage?
Side A pays directors and officers directly for covered loss when the company cannot or will not indemnify them. That can happen in insolvency or where law prohibits indemnification. It protects individuals' personal assets. Some companies add dedicated Side A or Side A DIC policies.
What is the difference between Side B and Side C?
Side B reimburses the company for amounts it has paid on behalf of its directors and officers, usually above a retention. Side C covers the company itself as a defendant. Side C is often most relevant to securities claims, and its scope varies by policy and by whether the company is public or private.
Do the three sides share one limit?
Often yes. Many D&O policies have a single aggregate limit that the sides draw from, so entity or reimbursement payments can reduce what is left for individuals. Some companies buy separate Side A limits to preserve protection for executives and directors.
What is Side A DIC coverage?
Side A DIC, or difference in conditions, is a separate policy that protects individual directors and officers only. It typically sits above or beside the main D&O program and may offer broader terms, including dropping down when underlying coverage does not respond. Triggers and exclusions vary by policy.
Does Side A have a retention?
Typically there is no retention, or a very small one, for individuals under Side A, since they are covered when the company cannot or will not indemnify. Side B and Side C usually have a retention that the company pays first. Confirm the figures in your policy.
Do founders of a private startup need Side A coverage?
Founders and board members may be exposed to claims from investors, employees, regulators or others, and the company may be unable to indemnify them if it fails. Side A is the part of the program built for that, so it is worth discussing limits with your broker.
Are investor board designees covered by the company's D&O policy?
They are often insured persons while serving as directors, but the investor's own policies may also respond, and the way the policies coordinate varies. Ask how other insurance and indemnification agreements apply, and which policy pays first.
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