SAFEGUARDS

Growing BusinessSAFEGUARDS

Fiduciary Liability & Fidelity Bond Coverage

QUICK SUMMARY

Fiduciary liability insurance protects companies against errors, omissions and “breach of fiduciary duty” claims in managing and administering employee benefit plans. It specifically covers unintentional failings or lapses by a company and employees who are responsible for management or oversight of these company plans. Importantly, this coverage includes not just retirement plans, but also health and other employee welfare plans.

In contrast, ERISA fidelity bonds protect a plan’s participants against fraud, theft, and other deliberately fraudulent acts by fiduciaries that result in financial losses to an employee benefit plan.

Fiduciary Liability Insurance Guards Against Mismanagement Claims

Fiduciary liability insurance covers the legal expenses of defending against claims, as well as the financial losses a plan may incur when breaches of fiduciary duty occur.

  • This insurance is not required by the Employee Retirement Income Security Act (ERISA), but under ERISA, fiduciaries may be held personally responsible for errors or mismanagement of employee benefit plans.
  • Duties of fiduciaries are defined as roles, not titles.
  • This insurance does not cover fraudulent acts like theft—and does not satisfy ERISA bonding requirements.
  • This type of coverage is not usually included in directors and officers (D&O) or companies’ general liability policies.
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ERISA Fidelity Bonds Cover Losses from Theft and Fraud

These bonds are a form of insurance that covers losses from an employee plan resulting from illegal acts such as theft and fraud.

  • Required by ERISA
  • Covers employees’ benefits; does not address any legal charges against plan administrators or others who embezzle or steal funds
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