Side A vs Side B vs Side C: Which Coverage Matters Most in Directors and Officers (D&O) Liability Insurance?

Directors and Officers (D&O) liability insurance protects the individuals who run a company from claims alleging wrongful acts in management. But not all D&O coverage is the same. The policy is commonly divided into three “sides” — Side A, Side B, and Side C — each addressing different payees, triggers and priorities. For U.S.-based organizations (New York, San Francisco, Chicago, Austin, etc.), choosing the right mix matters for litigation risk, M&A activity, and fiduciary exposure.

This article (Coverage Types and Scope pillar) breaks down the three sides, compares them side-by-side, and explains which matters most for specific company types and situations. For deeper reading on related D&O topics see the links at the end.

Table of Contents

Quick definitions: Side A, Side B, Side C

Side A (Individual Coverage)
- Protects the individual directors and officers when the company cannot or will not indemnify them (e.g., bankruptcy, insolvency, regulatory restrictions, or corporate policy limits).
- Pays on behalf of the insured individual — proceeds are typically not endorsed to the company.
Side B (Indemnification / Company Reimbursement)
- Reimburses the company when it indemnifies directors and officers for covered claims.
- Commonly called “Company Reimbursement” coverage.
Side C (Entity Coverage / Company Securities Liability)
- Insures the company itself for securities claims (e.g., shareholder lawsuits, SEC investigations) and other corporate exposures.
- Sometimes called “entity coverage” or “company coverage.”

At-a-glance comparison

Feature	Side A	Side B	Side C
Who is protected?	Individual directors & officers	The company (for amounts it pays to indemnify individuals)	The company (entity-level exposures)
Pays when company can’t indemnify?	Yes	No	N/A (it covers company liabilities)
Typical claims covered	Employment claims against officers, regulatory enforcement where indemnification prohibited	Same as Side A but paid to company	Securities class actions, derivative suits naming the entity
Priority in M&A/bankruptcy	Crucial (individuals need Side A if company insolvent)	Important for corporate balance sheet relief	Critical for public companies facing shareholder suits
Typical buyers	Startups, pre-IPO firms, execs in distressed firms	Middle-market, private firms that indemnify	Public companies, IPO-bound firms, financial institutions
Typical annual premium ranges (U.S.)*	$1k–$50k+ depending on company size & limits	Costs baked into combined D&O package	$10k–$1M+ for public companies

*Premiums vary widely by size, risk, financial condition, jurisdiction, claims history and coverage limits. See market sources below.

Why the distinction matters — practical examples

Startup in Austin, TX (early-stage, limited corporate assets):
- Most important: Side A. Founders and board need personal protection if the company cannot indemnify (e.g., bankruptcy or investor carve-outs). Many VCs insist on Side A or Side A Difference in Conditions (DIC).
Private middle-market company in Chicago that indemnifies officers:
- Most important: Side B. The company wants to protect its balance sheet when reimbursing executives.
Public company headquartered in New York facing securities litigation:
- Most important: Side C (entity) and robust Side A. Securities class actions can target the entity and senior leaders; public-company D&O often needs large Side C limits.
Nonprofit in San Francisco:
- Most important: Side A and Side B. Nonprofits typically indemnify volunteers and officers but may have limited assets.

When Side A is indispensable

Side A becomes critical when:

The company becomes insolvent or files for bankruptcy (indemnity is unavailable).
Indemnification is barred by law (e.g., some regulatory enforcement actions).
There’s a sale, spin-off, or clawback exposures where indemnity isn’t guaranteed.

Practical step: For high personal-risk executives (CEOs, CFOs), insist on a minimum Side A limit separate from entity coverage and consider a Side A DIC to ensure its enforceability even if the company’s D&O policy is exhausted.

When Side B matters most

Side B is primarily a corporate balance-sheet protection. If your company routinely indemnifies execs, Side B prevents cash-flow shocks from large settlements or defense costs. It’s often viewed as a standard component in middle-market packaged D&O policies.

When Side C matters most

Side C protects the corporation from securities-related claims and regulatory exposures. For public companies, companies planning an IPO, or firms in highly regulated sectors (financial services, healthcare, biotech), Side C can dominate the D&O program’s premium and limit needs.

Pricing reality (U.S. market examples)

D&O premiums vary widely: small private-company D&O policies for a $1M limit often start in the low thousands per year; mid-market and public-company programs can cost tens or hundreds of thousands — or substantially more if the company is in litigation-heavy sectors.

Small business example — Hiscox: small-business D&O offerings advertise relatively low-cost entry-level programs for typical small entities. Policy pricing for very small firms can start in the low hundreds to low thousands annually, depending on limits and exposures (see Hiscox small business D&O product pages). Hiscox Small Business D&O
Market-level context — Marsh/Aon: recent market reports note D&O pricing pressure in U.S. markets with material premium increases for public companies and sectors facing higher securities litigation or regulatory scrutiny; public-company and higher-limit programs commonly run into five- or six-figure annual premiums. See Marsh’s market updates for details. Marsh D&O Market Insights
Industry claims & venue trends — Stanford Securities Class Action Clearinghouse tracks securities litigation trends and confirms that New York and California frequently host filings, which contributes to higher D&O demands in those jurisdictions. Stanford Securities Class Action Clearinghouse

Carriers commonly writing D&O in the U.S. include Chubb, AIG, Travelers, CNA, and Hiscox. Pricing will differ by carrier, underwriting appetite and the specific risk profile of the insured.

Choosing which side matters most — a decision guide

If your directors/officers could be personally liable and the company has limited indemnity capacity (startups, early-stage, distressed) → Prioritize Side A.
If the company routinely indemnifies and wants to protect corporate assets → Ensure robust Side B.
If you’re public, preparing for an IPO, or subject to frequent securities/regulatory claims → Emphasize Side C (entity) and attach appropriate Side A protections for executives.

Practical recommendations for U.S. companies (NY, CA, IL, TX examples)

Startups (San Francisco, Austin): buy a strong Side A, consider Side A DIC, and keep at least $1M in Side A limits per key executive.
Middle-market private companies (Chicago, Dallas): balance Side A and Side B; consider $2M–$5M aggregate limits with higher retention if indemnification contracts exist.
Public companies (New York, San Francisco): structure robust Side C limits; expect premiums to reflect securities litigation environment — often five-figure to multi-six-figure annual premiums depending on limits and sector.

Actionable next steps

Review your corporate indemnification agreements and bylaws. Ensure they permit indemnification where intended.
Run a D&O risk assessment by geography (NY/CA claims environment), industry, and corporate stage.
Request comparative quotes from established carriers (Chubb, AIG, Travelers, Hiscox, CNA) and ask for line-item pricing for Side A, B and C separations.
Consider a Side A DIC if insolvency or M&A scenarios are a material risk.

Sources & further references

Insurance Information Institute — What is D&O Insurance? https://www.iii.org/article/what-is-d-and-o-insurance
Hiscox — Small Business D&O product pages (pricing examples vary by jurisdiction and industry): https://www.hiscox.com/small-business-insurance/directors-officers-insurance
Marsh — D&O Insurance market updates and insights: https://www.marsh.com/us/insights/research/d-o-insurance-market-update.html
Stanford Law School — Securities Class Action Clearinghouse (venue & filing trends): https://securities.stanford.edu/

If you need a comparison quote scenario for your company in New York, California or Texas (e.g., limits, retentions and estimated premiums from Chubb/AIG/Hiscox/Travelers), provide company size, revenue and public/private status and I’ll build a tailored side-by-side estimate.