Side A/B/C D&O Coverage

Side A/B/C describes the three-part structure of a modern D&O insurance policy, each 'side' being a distinct insuring agreement that responds to a different payer situation. Side A pays the defense and settlement costs of individual directors and officers directly when the company is legally or financially unable to indemnify them — for example in bankruptcy, or where indemnification is barred by law (as in most derivative-suit settlements). Side B (company reimbursement) pays the corporation back after it has indemnified its executives, so the balance sheet is protected. Side C (entity coverage) responds when the organization itself is named as a defendant, most commonly in securities claims.

For a small or mid-size business buyer, the practical importance is that Side A is the executive's personal safety net — it protects their home and savings when the company can't step in. Side A typically has no self-insured retention, meaning individuals pay nothing out of pocket to access it, whereas Sides B and C carry a retention the company must absorb first. Understanding the split matters because a wrongful act alleged against both the executives and the entity can trigger multiple sides at once, and allocation between covered and uncovered parties can become contentious.

A practical nuance: because Side C for private companies is usually limited to securities-type claims (and often extended via entity coverage to broader management claims), the three sides can compete for one shared limit. When the company and its executives are co-defendants, a large entity settlement under Side C can exhaust the policy and leave directors exposed. This is why many boards buy a separate, dedicated Side A DIC (difference-in-conditions) tower that drops down when the primary limit is gone. Buyers should confirm the retention structure and whether Side A has a stand-alone limit.