Why it matters for your company
Claims come from investors after a down round or a failed sale, from regulators, from employees and from competitors. The policy pays defense costs and covered settlements that would otherwise fall on individuals personally or on the company's indemnity promise to them.
For AI companies, statements about what the product can do are statements to investors, and overstated capability claims draw suits and regulator attention. Some management-liability forms now carry broad AI exclusions (Hunton Andrews Kurth, 2025-05-28), so a D&O renewal deserves the same endorsement read as an E&O renewal. A venture-focused startup insurer's survey put the median startup D&O premium at $6,300 a year (2026-05-21).
Related terms
- Side A, B and CThe three insuring agreements in a D&O policy. Side A pays individuals when the company cannot indemnify them, Side B reimburses the company when it does, and Side C covers the company's own liability, usually for securities claims.
- Claims-made and occurrence policiesAn occurrence policy responds to incidents that happen during the policy period, whenever the claim is filed. A claims-made policy responds to claims first made during the policy period, subject to its retroactive date.
- Absolute AI exclusionAn exclusion that removes any claim arising from, relating to or involving artificial intelligence in any way, with no carve-back for the insured's ordinary use. For a company whose product is a model or a machine, it can leave the policy close to empty.
- Retention and deductibleThe amount of a claim you pay yourself. With a deductible the insurer handles the claim and bills you back; with a self-insured retention you pay defense and loss up to the amount before the insurer steps in.