A fiduciary liability policy protects businesses’ and employers’ assets from claims of employee benefit plan mismanagement. Although ERISA bonding may be required by law, fiduciary liability insurance is not. These policies offer two broad coverage areas.
- Legal expenses incurred due to defense against a claim.
- Financial losses that plans may suffer due to a breach of financial duty, omissions or errors.
ERISA doesn’t require businesses to create employee benefit plans. However, it does set standards and defines conduct for those responsible for managing and overseeing the various plans once established. The plan sponsors and outside entities hired in financial capacities may be susceptible to liabilities. Fiduciaries may be held personally responsible for any losses an employee benefits plan experiences.
Coverage for fiduciary liability may not be adequate or addressed at all in other types of liability policies. Directors and officers policies can specifically exclude this kind of coverage. Errors and omissions insurance covers the business relations with customers, not employees. General liability policies may not be broad enough to adequately protect the personal assets of all employees.
A fiduciary liability policy responds specifically to claims generated as a result of dereliction of duty, errors and omissions as pertains to virtually any type of employee benefits plan. Experienced insurance providers may have cost-effective solutions that minimize risk and lets you focus on your business.