Fiduciary Liability Coverage
Why you and your organization need protection –
If your company sponsors a retirement or health plan for its employees and you are involved in any way with the management of that plan, you are likely considered a fiduciary. This means you can be held personally liable for what happens to the plan under ERISA law. As standard Directors & Officers and Employment Practices Liability policies exclude claims for ERISA violations, you cannot rely on those policies for protection in case of litigation.
TOP 5 REASONS YOUR ORGANIZATION NEEDS COVERAGE
A fiduciary – any individual involved in the management of a retirement or health plan – can be at risk if they breach their duties and be personally required to make the plan whole for any losses they caused.
Defending and resolving ERISA suits costs time and money. The average settlement is $994,0001, average defense costs are $365,0002 and 69 percent of substantive ERISA litigation is resolved in favor of the plaintiffs.
You cannot avoid liability solely by blaming plan participants for their investment decisions. Fiduciaries are responsible for providing a broad range of investment alternatives and minimizing the expenses associated with those investments. Since 2006, the plaintiff’s bar has recovered more than $170 million for excess expenses.
A fiduciary can be sued for not following the plan documents and plan participants regularly sue claiming denial of benefits in violation of plan documents. More than 9,000 ERISA lawsuits are filed each year on average.
A fiduciary cannot escape responsibility by blaming a service provider. According to the Department of Labor, it is the responsibility of the fiduciary to vet and monitor any outside vendor.
Click here to discover your coverage options.