Liability Coverage for Your Investment Plan Funds

Fiduciary Insurance Coverage

Employers are not required to offer employee benefit plans as part of a compensation package, but they are an advantageous way to attract and retain employees. Despite their usefulness as a recruiting and retention tool, employee benefit plans carry hidden exposure for your company.

A fiduciary is any person exercising discretionary control and authority, and given the primary responsibility to manage or administer an employee benefit and retirement plan and its assets. Fiduciaries have titles such as: plan sponsors, plan administrators, trustees and investment managers.

Breach of fiduciary duty and other wrongful acts can lead to expensive lawsuits. The most severe claims tend to involve careless investment of plan funds, especially if the plan has invested heavily in the sponsor employer’s own stock. These claims are often brought as a class action lawsuit.

An employer or plan sponsor can indemnify a fiduciary, but some companies are either not financially able to, or they can’t, due to laws that prevent them from doing so. As a result, the personal assets of a fiduciary are at risk.

No matter the size of your company, having adequate limits of fiduciary liability insurance should be a part of your comprehensive risk management program. A Fiduciary Liability policy covers breaches of fiduciary duties and errors in the administration of the plan, and it protects the personal assets of a plan’s fiduciaries. Most D&O policies do not cover fiduciary liability issues. Those insured under the policy usually include the sponsoring organization’s officers, directors and employees acting as fiduciaries or as members of any employee benefit committee.

Can you afford to not protect the fiduciaries of your employee benefit plans? Contact Britton Gallagher today for more information on fiduciary liability insurance and ways to mitigate your risk.