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What is Fiduciary Liability Insurance?
Fiduciary Liability Insurance protects businesses, executives and employees overseeing employee benefit plans from legal liabilities stemming from breaches of fiduciary duties, such as mismanagement or negligence. It covers legal costs, settlements and judgments associated with claims related to employee benefit plans, ensuring financial risk mitigation and protection against the consequences of fiduciary-related lawsuits.
How Does Fiduciary Liability Insurance Work?
Fiduciary Liability Insurance provides an added layer of protection complementing your existing risk management practices. Fiduciary Liability Insurance kicks in when incidents breach the safeguards you have instituted.
Here's how it works:
- Fiduciary Liability Insurance provides extra protection when preventive measures fail
- The policy covers expenses and liabilities from fiduciary breaches or negligence claims
- You implement governance policies, controls and safeguards as preventive defenses - oversights/lapses can still enable fiduciary misconduct claims
- If facing major fiduciary claims, the insurance covers, legal costs, settlements/awards, regulatory fines and expenses to resolve the matter
What Does Fiduciary Liability Insurance Cover?
Defense Costs
Fees for attorneys, experts, investigators, etc. to defend against claims
Settlements/Judgments
Amounts to settle fiduciary breach claims out of court; Court judgments/awards if claims proceed to litigation
Penalties/Fines
Regulatory penalties or fines from government entities; For violations of fiduciary responsibilities
Corrective Services
Hiring professionals to correct fiduciary violations, E.g. actuaries, accountants, administrators
Voluntary Compliance Costs
Expenses to voluntarily comply with regulations/laws, before claims are filed, to prevent future claims
Employee Benefits Claims
Claims related to mismanagement of employee benefits plans, such as 401(k), pension, healthcare plans
What is Not Covered?
Fiduciary Liability Insurance policies generally exclude claims based on criminal acts or fraudulent or dishonest conduct. Bodily injury and property damage claims are also not covered, as they would fall under other insurance products. Most policies contain exclusions related to failure to collect or pay contributions/premiums as required. Pending or prior litigation matters before the policy's inception date are usually excluded.
How Much Does Fiduciary Liability Insurance Cost for a Business?
The cost of Fiduciary Liability Insurance varies considerably depending on multiple factors. Premiums are influenced by company size, industry sector, extent of employee benefit plans and claims history. Larger organizations with more exposure tend to pay higher rates than smaller businesses. Ultimately, pricing is determined by an underwriting process evaluating the specific risk profile of each applicant.
Why Choose BenePac for Fiduciary Liability Insurance?
With over 40 years of expertise in delivering employee benefits and insurance solutions, BenePac is the ideal choice for Fiduciary Liability Insurance. Our tailored approach ensures your insurance policy matches your business requirements. Unlike generic options, we conduct thorough risk assessments and operational analyses to craft a package with optimal coverages and limits. Whether you operate a large corporation or a small business, BenePac offers affordable solutions to provide financial security and peace of mind.