Insurance for Employee-Owned (ESOP) Companies
From an agency that’s been one since 1988.
The business may not have changed. The risk you carry personally did, the day your employees became owners. Our ESOP team builds the program around the company you are now.
That means looking hardest at three coverages: Directors & Officers, Fiduciary, and Employment Practices. They’re the ones most likely to be missing the language that covers what employee ownership changed.
Where we start
Our ESOP team reads the program you already have, tells you plainly where it leaves you unprotected, and moves what needs to change to carriers who write these programs regularly.
However long you’ve been employee-owned, two coverages are worth reading again.
Directors & Officers Liability
When someone sues the people running your company personally for a decision they made in that role, this is the policy that responds. At an employee-owned company, the person bringing the claim is often one of your own owners.
Fiduciary Liability
Running a retirement plan makes you a fiduciary, which means the law requires you to put plan members’ interests ahead of your own. Under ERISA, the federal law covering benefit plans, you can be held personally responsible for how the plan is managed. Not the company. You.
Your ESOP is a retirement plan holding your company’s stock, so decisions about valuation and administration sit inside this coverage.
Would your existing ESOP policy protect you from an employee-owner claim?
Often, the answer is no.
It’s easy to miss, and expensive when you do.
Somewhere in the Directors & Officers policy is a line excluding your ESOP. It sits there quietly until a claim arrives from one of your own owners.
There’s no reason you’d have caught it. Finding it takes someone who reads these policies for a living.
So how does that happen?
Maybe your agent doesn’t have deep experience with employee-owned companies.
Maybe your carrier knows you’re an ESOP, and the exclusion costs them less.
However it happened, it removes the coverage your board is likeliest to need, and you find out the day you reach for it.
And if you’re not covered for that, it’s fair to ask what else is missing.
Send us the summary page at the front of your Directors & Officers policy. We’ll read it and tell you whether the exclusion is in there.
Employee Benefits for Employee-Owned Companies
As an employee-owned company, the money your health plan spends belongs to your owners. Past about 50 employees, your rates start following what your own people actually use. That means the plan isn’t something that just happens to you. You can move the number.
The hard part is that the data showing you how sits with your insurance carrier, not with you. So the increase arrives every year with a number and not much behind it.
Where we can help:
- Getting the numbers behind your renewal into your hands, so you know what’s driving the increase before you’re asked to approve it
- Showing you which parts of the plan are costing you the most, and what would change if you adjusted them
- Talking through other ways to fund the plan when your size and your claims make that worth a look
- Helping you explain all of it to the owners who are paying for it
