Be aware of your fiduciary responsibilities under ERISA.
Any company that offers retirement plans, profit sharing or employee stock ownership plans, defined benefit plans, or health and accident plans can be vulnerable to failures in fiduciary responsibilities and resulting—and very costly—lawsuits and reparations. Fiduciary liability insurance protects businesses and their assets from claims related to mismanagement of employee benefits plans, or claims that they have some how violated their fiduciary responsibility.
The Employee Retirement Income Security Act of 1974 (ERISA) does not require firms to carry fiduciary liability insurance, but under ERISA fiduciaries can be held personally responsible for the mismanagement of employee benefits plans. If such a claim is made against a corporation, fiduciary liability insurance covers legal expenses as well as any financial losses to the plan due to errors, omissions or breach of fiduciary duty.
Who can make fiduciary liability claims?
Fiduciary liability claims can be brought by employees who participate in employee benefits plans, as well as government entities like the Department of Labor. Under ERISA, employers (plan sponsors) and any outside providers of employee benefits plans can be held personally liable for:
- Providing inadequate information or instruction to employees,
- Improperly or poorly investing retirement funds, and
- Failing to inform employees about the availability certain coverage benefits.
In addition, fiduciary liability claims might involve:
- Denials of or changes in benefits,
- Wrongful termination of an employee benefits or retirement plan,
- Inadequate plan funding,
- Conflicts of interest, and
- Administrative errors.
Fiduciary liability insurance provides important protection.
Fiduciary liability insurance protects a business and its employees who have fiduciary responsibility under ERISA. It does not protect any outside advisors, consultants and administrators.
Your commercial general liability, professional liability and employment practices liability policies do not provide coverage for fiduciary responsibility claims. Fiduciary responsibility claims are typically excluded under these other policies.
Strate Insurance Group has the experience and knowledge to secure the right coverage for your business.
Fiduciary liability coverage is very complex. You need the business insurance advisors at Strate Insurance Group.
We will help you understand where you are vulnerable to fiduciary liability breaches. By placing your entire business insurance portfolio with us—and our secure, top-quality business insurance carriers—you can be confident that your needs will be met.
Our risk managers will assess your business and suggest insurance solutions and wide-ranging risk management strategies that will help you manage your business risks. Contact us today to learn more about fiduciary liability insurance, and more.