Fiduciary Liability Insurance

Fiduciary liability insurance protects individuals who manage employee benefit plans against claims of mismanagement. Fiduciary liability insurance protects against unintentional failings or lapses by a company and its employees. It covers the legal expenses of defending against a claim, as well as any financial losses the plan may have incurred. Fiduciary liability insurance is different from ERISA fidelity bonds, which protect plan participants against fraud, theft, and other deliberately fraudulent acts.

Fiduciary Liability Coverage is designed to protect administrators and executives from claims stemming out of the mismanagement of employee benefit plans. Any company offering a 401(K), pension plan, medical, life or disability insurance to their employees could be at risk.

Fiduciaries can be personally liable for errors, omissions, or breach of duty incurring losses to a benefit plan. Accountability can also be accrued to the company who sponsors the plan, the plan itself, or other outside consultants giving financial advice for the plan. Specific Fiduciary Liability coverage is usually not included as part of a company’s general liability plan, and must be purchased separately.