Directors, officers, managers and business entities have certain risks and exposures that arise from governance, finance, benefits and management activities. Having management liability insurance can protect you from these exposures and prevent you from losing your business.
Fiduciary liability insurance is one of the management liability coverages that covers a very specific risk–and a potentially financially devastating one. The risk is breaching fiduciary duties, and it comes from the Employee Retirement Security Act of 1974 (ERISA), which governs many employee benefit schemes.
Officers of a company who oversee such schemes have fiduciary duties. This means that they are ethically and legally bound to act in the best interests of the employees, and can be sued if they breach this duty (even unintentionally). A breach of this duty could be as simple as making investment decisions for the plan that don’t work out well.
ERISA means a fiduciary could be held financially responsible for making good any losses from their alleged mistakes or failings, and when you’re talking about a workforce’s retirement benefits, that can make for eye-watering figures.
Many general liability insurance policies don’t cover claims relating to ERISA, so a specialist fiduciary liability policy is the best way to mitigate this risk.
Policies usually cover the costs of defending claims and paying out any liability. Additionally, fiduciary liability insurance often includes access to expert lawyers who specialize in ERISA cases.
Our experts can help you obtain a fiduciary liability insurance policy that’s right for your business. So, reach out today!