Fiduciary Liability
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Product Summary
The Employee Retirement Income Security Act of 1974 (ERISA) prescribes federal standards for the funding, participation, vesting, termination, disclosure and fiduciary responsibility of private pension and benefit welfare plans. ERISA is intended to ensure that employees participating in pension and benefit plans are able to collect those benefits. The types of plans covered by ERISA include pensions, profit-sharing plans, 401(k) plans, ESOPs, and welfare benefit plans, such as life, health and dental. As a result of ERISA, Fiduciary Liability insurance was created to protect the individuals who are considered to be fiduciaries of the employee benefit plans.
What's Covered?
ERISA designates the people who administer and manage pension and benefit plans as fiduciaries. Fiduciaries are personally liable for breaches of duty, as defined by ERISA, while administering the plans. An example of a breach of fiduciary duty is failing to prudently invest the plan assets, resulting in financial loss to the plan beneficiaries. A Fiduciary Liability policy protects the individual fiduciaries' personal assets from claims alleging a breach of duty.
Fiduciary Liability policies generally include Employee Benefits Liability coverage which protects the business from losses arising from the administration of employee benefit plans, such as not properly enrolling a new employee in a health plan. Employee Benefits Liability coverage is sometimes endorsed onto a General Liability policy. Employee Benefits Liability coverage does not cover the liabilities imposed by ERISA on the benefit plans' fiduciaries.
Fiduciary Liability is written on a Claims-Made coverage basis.
What Isn't Covered?
A Fiduciary Liability policy typically excludes criminal acts, contractual liability, bodily injury, libel and slander.
What Affects the Cost of the Policy?
The premium is based on a variety of factors, including the size of the plan assets, number of fiduciaries and policy limit and deductible.