Who Needs Fiduciary Liability Insurance?
If you are responsible for managing the assets of an individual or organization, you’re a fiduciary. This means you must uphold the highest standards of trust and good faith while serving their best interests.
If a mistake in your management of employee benefits causes personal harm to participants, you can be held personally liable and responsible for reimbursing their financial losses, and you could even go bankrupt as a result. That’s where our fiduciary liability insurance products prove useful.
Fiduciary liability insurance is helpful for anyone who administers an employee benefit plan, such as:
- Medical plans or health insurance
- Dental plans
- 401(k) and 403(b) retirement plans
- Stock option plans
A broad range of organizations can face these risks, including:
- Private companies
- Public companies
- Nonprofit organizations
- Financial institutions
Our Fiduciary Liability Insurance Coverage
Our policies can cover a broad range of fiduciary mistakes. Here’s an overview of some of the most common errors in managing benefits that our policies may cover:
- Making poor decisions related to hiring service plan providers
- Making mistakes in administering benefit plans
- Failing to administer plans in accordance with plan documents
- Carrying out prohibited transactions
- Wrongfully denying benefits to an employee or employees
- Providing advice that is beneficial to the fiduciary but harmful to the plan holder
- Failing to supervise service providers adequately
- Failing to diversify plan assets
- Providing advice to the plan holder or participants that is incorrect or improper
- Changing plan benefits improperly
- Mishandling plan records
- Charging excessive fees
- Making errors in computing plans
- Acting in a manner that poses a conflict of interest
- Providing interpretations of plans that result in lost benefits
When these types of problems take place, your policy can pay for your defense costs as the fiduciary and any judgments or settlements that result from legal action against you.
Keep in mind that this insurance won’t cover intentional wrongdoing, crimes and embezzlement.
Do Other Policies Cover Fiduciary Liability?
Even if your company has other types of liability policies, there’s a good chance that they don’t include coverage for fiduciary liability. In fact, it’s specifically excluded in most Directors and Officers (D&O) policies. Likewise, Errors and Omissions (E&O) coverage is designed to cover your relationship with your customers rather than your own employees and won’t cover mistakes in managing benefit plans.
Thus, it is advised to acquire a Fiduciary Liability policy in addition to any other business insurance policies your organization purchases to ensure ample protection for your employees and their plans.
Learn More About Fiduciary Liability Insurance
Employee benefit plans can be quite complex, and even the most qualified personnel can make mistakes when managing them. If you’re a small or growing business, even one fiduciary liability claim could cause irreparable financial damage. Ensure you have the right protection in place and protect the personal assets of everyone you employ with fiduciary liability insurance from Burton & Company. Get in touch today by calling (888) 652-1325 or requesting a quote online to learn more and get your questions about insurance answered by our team of experts.