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Financially responsible officers are the individuals who carry the sole responsibility for all financial matters within a business organization. In the event that the company suffers financially as a result of the appointed officer's actions, the company can sue them.
Having financially responsible officer insurance will keep you covered from having to pay any legal expenses that can result from the lawsuit.
Why Do Financially Responsible Officers Need Insurance?
There are a few key reasons why it's important for financially responsible officers to have insurance. First, they are legally liable for any financial losses that the company suffers as a result of their actions.
Second, they need protection in case a lawsuit is brought against them. And third, insurance can help cover the costs associated with any legal expenses that may arise.
In other cases, financially responsible officers are simply required by law or by the company to take out such a policy in order to have the job with all of its responsibilities in the first place.
What Does the Typical Financially Responsible Officer Insurance Cover and Not Cover?
When it comes to running the finances of a company, a single mistake can cost the company a lot of money. As a result, financially responsible officer insurance is there to cover the appointed individual in case of:
- Mismanaged funds
- Failure to follow organizational bylaws
- Employee lawsuits
- Failure to comply with regulations
- Libel and other advertising injuries
In regards to what this insurance policy doesn't cover, that would be matters related to:
- Intentional wrongdoing
- Client injuries or property damage
- Board member injuries
- Professional mistakes or oversights
How Much Does Financially Responsible Officers Insurance Cost?
The average cost of financially responsible officer insurance is typically less than $1,500 per year. This is what over 50% of small businesses pay. And only 18% pay between $1,500 and $3,000 per year.
As for the remaining 20 plus per cent, they pay over $3,000 per year for financially responsible officers insurance.
The cost of the insurance policy depends on the level of coverage you want the policyholder to have.
Typical Financially Responsible Officer Insurance Claims
A lot of insurance claims regarding financially responsible officers are a result of financial losses that a company has incurred as a result of the officer's actions.
The reasoning behind those varies from company to company but predominantly, they are as a result of:
- Failure to comply with regulations
- Mismanaged funds
- Libel and other advertising injuries
- Employee lawsuits
- Failure to follow organizational bylaws