Directors & Officers Liability

Company directors and officers have a moral and legal obligation to do what they feel is in the best interest of the company. Unfortunately, lawsuits and damage claims have risen tremendously in recent years. Some of these suits are aimed directly at the corporate officers or directors while others aim at the company itself.

Directors and officers insurance also known as D&O, is financial protection against management specific claims. It is similar to E&O but covers executive and corporate performance instead of professional service performance.

Errors and Omissions insurance protects professionals such as accountants when they make professional mistakes that cause financial loses to their customers. Directors and Officers insurance protects corporate executives when mis-management claims are made against them from stockholders, employees, and outside parties.

Examples: A company director or officer could have the following types of suits levied against them:

• Stockholders may sue the company and its executives for poor financial performance.
• Stockholders may sue for dishonesty or fraud.
• Stockholders may sue because the company is being taken over by a competitor.
• The SEC may sue the company for potential financial fraud or mistakes on the company’s disclosure and earnings statements.
• Employees may sue for wrongful termination.
• Employees may sue for discrimination.
• Employees may sue for a breach of contract.
• Customers may sue for fraud or dishonesty in advertising.
• Third party groups, such as public activists or government bodies, may sue for action or inaction by the company.

When individuals, other corporations, competitors, Federal regulators, stockholders and others sue a company, they also often sue the primary directors and officers. It is estimated that 80 percent of liability suits aimed at a specific company director will also name the company itself in the suit along with other executives.

Directors and officers insurance has been around for over 50 years but there is a wide variation in coverage levels. When reviewing your D&O policy options and planning personalized coverage for your company, it is important to look at all options available. Two coverage plans can provide very different levels of coverage despite being similar in price.

Go through the fine points with your commercial insurance agent and make sure you are getting all of the different levels of protection you need on your D&O policy.

Make sure to also review what is specifically excluded in the policy. For example, many D&O policies will not provide coverage for specific fraud and criminal acts. The policy may not cover lawsuits involving property damage, bodily injury, or pollution discharge.

Your company cannot grow without this critical commercial insurance coverage. In today’s world of increased litigation, most investors and venture capitalists will not work with your company until you are protected by a solid D&O insurance policy. You will also find that you are unable to attract skilled executives to the top positions without D&O coverage, because the directors and officers can be held personally liable for acts made by the company.

Group Health Insurance:

Group health insurance is a insurance coverage that all businesses should have. Not only does it offer you as the business owner specific tax breaks, it also attracts better employees who remain more loyal to your company over time.

Group health insurance is an important benefit to offer employees, because it can often be the deciding factor of whether your prize employee takes a job with another company or stays working for you. Offering group health insurance to your employees can often sway them to accept lower salaries, because the health benefits are seen as a form of pay that they don’t have to pay income taxes on.

Group health insurance allows you to provide health care coverage to multiple people at discounted rates. It is estimated that as much as 60 percent of the United States workforce gets their healthcare coverage through a group policy that is provided by their employer. This is such an important benefit to so many employees that it can be the deciding factor on whether they change jobs, or accept specific job offers.
Affordable Rates

When many people pitch in to help cover the cost of health insurance, rates go down for all of the parties who are included in the coverage. This phenomenon makes it so that group health coverage provided to your employees is an affordable investment they are able to make for themselves and their families. Of course, rates vary based on coverage and location, but where independent health insurance may cost a person $500 every month, group health insurance provided by their employer may be as little as $200 per month.
For many workers, having group health insurance through their employer is the equivalent of receiving a much higher rate of pay for their job because they get access to a benefit at much lower costs than they can obtain on their own.
Employee Retention

Because health insurance is such a coveted job benefit, offering it to your employees can help keep them as valuable and dedicated workers in your company for many years to come. Health insurance benefits attract the brightest and best employees in the industry, and helps retain them for a much longer period. Since they feel you are taking care of them by offering such a valuable benefit, they are likely to be more loyal to you as the business owner and overall more loyal and dedicated to your company.
Employee Benefits

Group health insurance is a medical insurance policy that can be obtained by companies with as few as two employees. Larger small businesses up to fifty employees are also ideal candidates for a group health insurance policy. With this insurance coverage, your employee’s health care costs are covered in full or in part by the company insurance policy.
For example, health insurance policies may help cover most of the costs for your employee’s prescription drugs, and it may enable them to visit the doctor for a wellness checkup for a small co-payment fee of five or ten dollars.

Many group health policies will even cover pre-existing medical conditions. This is beneficial to your employees because they do not have to pay for the full cost of medical care for health problems they acquired earlier in life. As an employer, this is a big benefit to you because many employees will accept lower wages in exchange for health insurance policies that allow pre-existing conditions.

Some group health policies cover the cost of hospital stays, pregnancy and birth, wellness care and care for when the employee becomes sick or has an accident. Some policies may even offer extended coverage for the employee’s immediate family members.
Tax Advantages

Employers who offer group health insurance coverage to their employees benefit in a number of ways. It is easier to attract highly qualified employees to your company and it is easier to keep them for the long term. Many employees see health coverage benefits as an added form of income that they do not have to pay income taxes on.

Regulations vary from one state to another, but employers also receive tax breaks when they offer health insurance coverage to their employees. The portion of the insurance premiums that you pay to help maintain affordable health care coverage for your employees can be deducted as a regular business expense.

Check with a licensed tax professional for the details but you may find there are other incentives and tax breaks that you can claim by maintaining this coverage for your employees.

Every company has unique needs and variations to how they are organized, so setting up group health insurance for your business should be tailored to your specific professional requirements. Small businesses are generally those who have between two and fifty employees on the payroll and the health care coverage benefits available to businesses of that size can vary from those available to larger corporations that have thousands of employees.

Consider your current employee base and what health insurance benefits may be the most desirable to them over the long term. For example, if you employ several young mothers, they may be particularly interested in obtaining low cost family health insurance.

A business who mainly employs college attending males will have different health care insurance needs than one who employs older men and women who have grown children and grandchildren. Determine what specific health care benefit coverage your employees are likely to want and determine what your business can afford for the health care insurance budget.

Sometimes the number of employees that your business has to include in the health care coverage will limit or change the types of services that can be included in the coverage policy. So once you have determined the health care coverage that is important to your workforce, talk to your insurance agent to see if everything is available for the size and type of business you operate.

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