Many consequences may emerge when your business regulations display noncompliance behavior. These regulations may include local and federal laws, professional standards, and safety mandates. If you violate any of these, consequences can range from steep fines to punitive action. In some cases, your business may even be subject to litigation.
Directors and Officers Liability and Noncompliance
It’s crucial to shield your business from these and other potential consequences by investing in a directors and officers liability policy.
Directors and Officers Liability Can Cover Penalties
Noncompliance comes at a cost. Most professionals understand this and strive to comply with business regulations. Sometimes, though, noncompliance is unintentional, leading to unexpected penalties for your company. It is especially true in highly regulated industries such as health care, financial services, and construction. Consider, for example, the most expensive OSHA fine of all time — $81,340,000. Although it’s unlikely that your company will ever rival this figure, it illustrates the fact that you need D&O insurance to protect against the potential of such costs.
Understanding What Noncompliance Means
To avoid noncompliance, you need to understand precisely what it means. Different actions may constitute noncompliance in various industries, so business owners must be familiar with the unique standards that exist in their field. Business owners should also secure directors’ and officers’ liability coverage appropriate for their company’s risks. Take the time to review the laws that govern your business and conduct regular compliance audits to minimize violations.
How To Avoid Noncompliance Penalties
In addition to conducting audits, companies can avoid noncompliance penalties by hiring a compliance coordinator. It is a wise idea for companies functioning in the aforementioned highly regulated sectors. It’s also a good idea for smaller businesses that want a dedicated professional to help their company avoid penalties. A compliance coordinator will accomplish this by monitoring the operations of your business, identifying any problems or concerns, and ensuring that company policies align with applicable regulations.
Different Types of Noncompliance Penalties
You already know that noncompliance can result in fines. A company may sometimes face additional penalties, such as mandatory compensation to customers. If your business’s noncompliance affected clients, they might have the opportunity to initiate litigation, which may also result in a monetary settlement. Directors’ and officers’ liability coverage is the best way to avoid this because coverage typically includes various legal expenses. Without a D&O policy, your company may be solely responsible for fines, settlements, and other monetary penalties for noncompliance.
Businesses Need Directors and Officers Liability Coverage
There’s no question that directors’ and officers’ liability insurance is a necessary investment for your business. Securing adequate coverage will ensure that your company retains stability despite business noncompliance penalties and litigation. Your risk management strategy is only complete if it includes this form of insurance. Talk to your insurance agent to learn about the right D&O coverage, minimize potential liabilities, and develop workplace compliance strategies.
About Haughn & Associates
Founded by Michael Haughn in 1986, Haughn & Associates is a full-service, family-owned, independent insurance agency based out of Dublin, Ohio. H&A strives to provide the best possible price and unique insurance solutions across a myriad of industries, including construction, IT, Habitation & Commercial Property, Agriculture, and Engineering. Devoted to providing the best of business insurance, life and disability insurance, personal insurance, employee benefits, and bonds, H&A is proof that success lies in long-standing client relations and satisfaction. To learn more about how H&A can be of service to you, contact us at (877) 802-2278.
