When Should a Startup Buy D&O Insurance?

Do not wait until financing documents are ready to sign before checking insurance requirements. Triple-I reports that investors often require D&O before investing, and a claims-made form can make the effective and reporting dates especially important. Ask the broker and investor what limit and wording are required, how much time the insurer needs to assess the submission, and whether the policy must be effective before closing. Verify the effective date, retroactive date, named insured entities, and any continuity or prior-notice terms in the issued policy. Tell the insurer about known disputes or circumstances when asked, since prior-matter wording may affect the response.

Timing also affects which policy period may respond. D&O is often claims-made: the date a claim is first made and reported, the retroactive date, and prior notice can matter as much as the date of the alleged act. A later policy may exclude a matter the company knew about or reported earlier. Get written confirmation of the requested effective date and any extended reporting option, then coordinate it with the financing timeline. Do not assume a quote, application, or certificate itself means a policy has been bound.