I started an S Corporation in Texas about 15 years ago, in which i am the current President. The corporation is operated by my father, mother amd myself. My parents are 50% stock holders and I have 50%. How can I best minimize my exposure to liability issues that may occur due to their often careless management decisions?
State/Country relating to question: Texas
The best form of protection would be to get insurance - an umbrella policy.
The next best course of action for you would be to document anything and everything that they have done to protect yourself.
What sort of things are they doing?
Most issues i have concern employees, hiring of delivery drivers with unsafe driving histories and questionable legal backgrounds, lack of training given to staff (who often are under 18 years old) that are hired to operate and enforce the safety regulations on amusement rides, and unusually long and physically demanding work shifts being required of teenage employees. These issues combined feel like trouble to me...
Yes, there is certainly issues there to be concerned about - especially drivers with unsafe driving histories and the lack of training needed to operate the amusement rides.
I would most certainly think about a big umbrella insurance policy. Have you talked to your insurance agent about increasing the liability limits or an umbrella policy?
I currently have the minimum that is required which is a $1 million general liability. The carrier I use has always recommended to go with the minimum that is required by law. They believe that the less we are insured, the less likely we are to be involved in a large law suit. A different carrier covers my property issureance, but I don't have an umbrella policy personally or for the business. Is that my best place to start, assuming that they are going to continue doing things in this reckless manner? There are umbrella policies that can protect me financially from the carelessness of the other corporate officers?
That's their perspective certainly - but I don't agree with them. Regardless, they have a duty to defend as per the policy.
I would purchase an umbrella policy for the business. An umbrella policy that you buy personally might protect you with business matters; however, I would really review that contract and get that in writing from the agent.
There is insurance policies too that specifically protect corporate officers and directors. That is another policy I would look at too.
20 years experience in business law - sole proprietor, partnership, and corporations
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