For small companies, directors and officers (D&O) insurance is a lot like capital: Either you can't get it at all, or it is too expensive.

In Frank Kocsis's case, he simply couldn't get it. After the president and chairman of Advanced Cellular Technology Inc. took his car-telephone company public last year in the Denver penny market, he asked several people to be on his board of directors. Already, one has refused to join until the company obtains D&O insurance. Yet so far, Advanced Cellular has been turned down by three insurance companies on the grounds that it had no sales until this year, and therefore its risk could not be accurately assessed.

Even when a company is able to get the insurance, it is expensive, and is getting more so by the month. Stunned by an increasing number of shareholder suits and rising legal fees, insurers have tripled their premiums in the last year, excluded certain types of claims, and lowered the median policy limit. Although the size of premiums depends on many factors -- including the amount of the coverage and deductibles, company size, and financial history -- companies with assets ranging from $15 million to $25 million can, according to one estimate, expect to pay an average of $25,000 to $50,000 for a $5-million policy.

Businesses that find it difficult to get insurance should consider contacting the National Association of Corporate Directors Inc. (NACD), in Washington, D.C. The group, in conjunction with an insurer, will provide D&O coverage for all NACD members who complete a special two-day directors' training program, among other requirements. "As soon as a company is out of the start-up mode and begins offering products to the public, insurance ought to be at the top of the list," says Patrick J. Mahoney, a Palo Alto, Calif., lawyer who represents corporate directors.And the earlier the company develops a relationship with a broker, Mahoney adds, "the easier it will be to increase limits later on."