Fiduciary Liability Insurance
According to the Employee Retirement Income Security Act of 1974, also known as ERISA, fiduciaries may be found personally liable for retirement plan losses to benefit plans that happened as a result of their own errors and omissions or as a breath of their duties as a fiduciary.
A fiduciary is a person responsible for managing company health, retirement, or pension plans and/or 401(k) plans. In today’s litigious society, the first response when things go wrong is to sue. This means that whether you’re at fault or not, you could face costly litigation just defending yourself against these claims made against you.
Fiduciary responsibilities are considerable, and so are their risks. Suits can be filed against fiduciaries for a wide range of reasons, including:
- Denials or changes in benefits, reductions in particular.
- Administrative errors.
- Failure to properly fund plans.
- Wrongful termination of plans.
- Conflicts of interest.
- Offering improper advice or counsel.
These claims may be made by employees who participate in the plan or by the U.S. government. When lawsuits are filed, they are typically filed against the business itself, the fiduciaries of the business, and the plan in question.
What is Fiduciary Liability Insurance?
A fiduciary liability insurance policy provides protection for your personal assets and your good name in the event that you are sued for your role as fiduciary. The coverage not only offers protection if an award is made against you, but helps cover your legal expenses during the course of a trial and/or settlement.
Fiduciary liability coverage fills in gaps that aren’t covered by traditional errors and omissions (E&O) coverage, employee benefits liability (EBL) insurance, directors and officers (D&O) insurance, and general liability coverages.
Your insurance needs are complex and may include the need for fiduciary liability insurance in addition to and in combination with the types of insurance mentioned above. Some policies will provide protection for civil penalties related to Health Insurance Portability and Accountability Act (HIPAA) violations and for 502(1) or 502(i) penalties. It’s important to discuss the coverage you receive with a qualified independent insurance agency, like Otterstedt Insurance Agency, and get the plan that provides the broadest possible protection.
Who Needs Fiduciary Liability Insurance
The list of those who need this specialized type of coverage includes business owners as well as employees who play a role in managing health and retirement benefits of any kind on behalf of the business.
No one expects to make mistakes, but mistakes in the area come at a high price. The cost of insurance is a small one to pay when compared to the price of clearing your name and protecting your financial assets in a prolonged court battle or of paying a settlement to someone who has filed suit against you.
Keep in mind that you can be sued even if you’ve done nothing wrong. These lawsuits may ultimately exonerate you, but the price of doing so in legal fees and lost time at work are high.
Why Work with Otterstedt Insurance Agency?
You need to work with an agency that sees you as a person and not only as a potential policyholder. We believe our ability to see the person behind the policy is the reason we’ve been so successful since 1919. It’s these old-fashioned values that have kept our business focused on families in Englewood Cliffs, Teaneck, Allamuchy, Pompton Plains, Hasbrouck Heights, and Summit, New Jersey.
We’ve recently been named as a top 50 insurance agency throughout the country and provide our customers with our long history of expertise in the industry and a wide selection of insurance products to choose from. This allows us to consistently offer competitive rates while maintaining high standards.