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Fiduciary Liability

Fiduciary liability protects fiduciaries and organizations from breach of duties imposed by ERISA and from negligence in the administration of employee benefit plans.

Coverage can apply to a wide variety of situation, but some common examples include administrative errors, failure to disclose, failure to enroll, etc.  Your organization and responsible fiduciaries may be held liable for loss of potential investment gains or loss of benefits (due to failure to enroll or disclose), in addition to any associated defense costs.

Fiduciary: Common Coverage Gaps

Retroactive Date Gap

When switching from carrier to another, be sure the Retro date is matched by new carrier.

Underinsured

Defense costs can mount very quickly with any type of management liability claim.  You have the option to buy a policy with defense costs outside the limit of liability.  This is often advisable unless you’re on a very tight budget.

Defense costs on a serious claim can easily reach $500K to $1M which may not leave much for the settlement or judgement if you only carry $1M limit.  This could also be an issue if you have more than one claim in a given year.

Benefits Due

Fiduciary policies exclude benefits due, which mean if an insurance carrier refuses payment of benefits (for any reason), then you are not covered for any alleged liability.  Most policies do provide defense coverage and this is desirable.