Fiduciary liability insurance, otherwise known as management liability insurance, is a type of insurance coverage that protects businesses and employers from claims that allege a breach of fiduciary duty. It is a must-have for any business that employs workers.
What Is A Fiduciary?
A fiduciary is essentially anyone who has decision-making authority with employee benefits. Some examples of fiduciaries are employers, plan administrators, plan trustees, internal investment committees, and the directors and officers of the business.
What Are Employee Benefits?
As mentioned previously, fiduciaries are responsible for handling and providing employee benefits, but what are employee benefits? Generally speaking, employee benefits fall into two broad categories. These are retirement plans and welfare plans. Examples of retirement plans are pension plans and 401(k)s. Examples of welfare plans are medical benefits and disability.
Who And What Does Fiduciary Liability Insurance Cover?
The individuals covered by fiduciary liability insurance are the owners of the business and the employees involved in fiduciary roles. As far as the things covered, fiduciary liability insurance provides coverage for a number of fiduciary breaches including:
- Errors in administering plans
- Errors in counseling
- Negligence involving employee retirement plans
- Improper changes in benefits
Handling fiduciary duties can be complicated and risky. Fiduciary liability insurance can go a long way towards helping everything run more smoothly.