Fiduciary Liability Insurance

Frequently Asked Questions

• Who is a fiduciary?

  If your company sponsors an employee benefit plan, such as a 401(k) plan or other retirement plan under ERISA, you are considered a fiduciary if you are involved with the management of that plan. If your company is a small company, it is particularly important to consider the fact that as a fiduciary, it is your responsibility to select advisors and investments, hire the plan’s record keeper, minimize expenses, and carefully follow plan documents.

• Why do I need fiduciary liability insurance?

  Lawsuits can expose fiduciaries to numerous claims by plan participants and beneficiaries. These exposures include claims for failing to make timely contributions, not following plan documents, failing to prudently invest to meet employee expectations, paying excessive fees, and failing to respond to requests for rollovers, distributions, and investment changes.

• Can I be held personally liable?

  Under ERISA law, fiduciaries can be held personally liable to the plans’ participants/beneficiaries for breach of fiduciary duties and responsibilities. As such, an individual fiduciary’s personal assets are at risk if he/she does not carry out the required fiduciary obligations.

• What does fiduciary liability insurance cover?

  It covers the legal defense costs and your personal liability for actual or alleged breaches of fiduciary duties in connection with employee benefit plans. Thousands of ERISA lawsuits are filed each year, and with staggering defense costs required to defend those suits. Fiduciary liability insurance is necessary because while the ERISA bond covers the plan for any loss by theft, it does not cover fiduciaries for lawsuits brought by third parties.