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Employment Law

3rd Parties What is Fiduciary Liability Insurance?

HR Consultant 2012.01.08 01:39 Views : 506

What is Fiduciary Liability  Insurance?

Fiduciary Liability Insurance pays, on behalf of the insured, the legal liability arising from claims for alleged failure to prudently act within the meaning of the Pension Reform Act of 1974. “Insured” is variously defined as a trust or employee benefit plan, any trustee, officer or employee of the trust or employee benefit plan, employer who is sole sponsor of a plan and any other individual or organization designated as a fiduciary. Group life and medical expense plans, as well as pension and retirement plans, are within the scope of the law.

 

 

 

        Who is considered a Fiduciary?

 

Any individual included in the plan document by name or title, or anyone who has discretionary authority over the administration or management of a plan or its assets. The term is intentionally loosely defined to hold accountable all individuals who may be responsible for misuse of plan assets or a loss to plan participants.

Any employee who has discretionary authority over a plan or who assists in its administration can be exposed to liability. This list of individuals might include an appointed fiduciary, a plan administrator, a human resources employee, or anyone who helps to administer a plan.

 

 

 

When do I need Fiduciary Liability Insurance? And what is ERISA act 1974?

 

 

 

 

 

Are you a fiduciary? Are your personal assets at risk? Are you subject to lawsuits, fines, and penalties? Many people are and don't know it.

If you are an owner or officer who makes decisions about your company's 401(k) plan or other qualified employee benefit plan(s), odds are, your personal assets are at risk! Under the ERISA act of 1974 (Employee Retirement Income Security Act), fiduciaries can be held personally liable for losses to a benefit plan incurred as a result of their alleged errors, omissions, or breach of their fiduciary duties.

Employment Liability Insurance does not cover all situations of fiduciary responsibility, especially those regarding imprudent investment of funds.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Why do I need Fiduciary Liability Insurance?

 

 

 

 

 

Under ERISA, fiduciaries may be held personally liable for breach of their responsibilities in the administration or handling of employee benefit plans. Fiduciary Liability Insurance is not required by ERISA. However, it is strongly recommended if you are a fiduciary of a welfare and/or pension plan because your personal assets are at stake. Many fiduciaries believe incorrectly that their ERISA fidelity bond protects their personal assets.

Furthermore, many think that this type of coverage is included in their D&O policy. Most D&O policies exclude fiduciary liability exposures as well as those exposures pertaining to the Employee Retirement Income Security Act (ERISA).

ERISA also broadly defines the types of employee benefit plans for which fiduciaries are responsible. This extensive list can include pension plans, profit sharing plans, employee stock ownership plans (ESOPs), and even health and welfare plans.

Moreover, designated fiduciaries are not the only targets of such lawsuits; targets can also include the employer and even the plan itself. Claims can be brought by plan participants, participants’ legal estates, the Department of Labor, and the Pension Benefit Guaranty Corporation. Such claims may include allegations of:

 

 

 

 

 

** 상기 내용은 무단 복제를 금합니다.

** 상기 내용에 따른 모든 Liability 본인에게 있음을 알려드립니다.

** Counsel은 법률 자문이 아닙니다. 따라서 소송에 관련된 건은 전문 변호사와 상담하시는것이 좋겠습니다.

** 추가 질문이 있는 경우에는 아래에 댓들을 달아주시면 회신드리겠습니다.

Who is considered a Fiduciary?

 

Any individual included in the plan document by name or title, or anyone who has discretionary authority over the administration or management of a plan or its assets. The term is intentionally loosely defined to hold accountable all individuals who may be responsible for misuse of plan assets or a loss to plan participants.

Any employee who has discretionary authority over a plan or who assists in its administration can be exposed to liability. This list of individuals might include an appointed fiduciary, a plan administrator, a human resources employee, or anyone who helps to administer a plan.

 

 

 

When do I need Fiduciary Liability Insurance? And what is ERISA act 1974?

 

 

 

 

 

Are you a fiduciary? Are your personal assets at risk? Are you subject to lawsuits, fines, and penalties? Many people are and don't know it.

If you are an owner or officer who makes decisions about your company's 401(k) plan or other qualified employee benefit plan(s), odds are, your personal assets are at risk! Under the ERISA act of 1974 (Employee Retirement Income Security Act), fiduciaries can be held personally liable for losses to a benefit plan incurred as a result of their alleged errors, omissions, or breach of their fiduciary duties.

Employment Liability Insurance does not cover all situations of fiduciary responsibility, especially those regarding imprudent investment of funds.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Why do I need Fiduciary Liability Insurance?

 

 

 

 

 

Under ERISA, fiduciaries may be held personally liable for breach of their responsibilities in the administration or handling of employee benefit plans. Fiduciary Liability Insurance is not required by ERISA. However, it is strongly recommended if you are a fiduciary of a welfare and/or pension plan because your personal assets are at stake. Many fiduciaries believe incorrectly that their ERISA fidelity bond protects their personal assets.

Furthermore, many think that this type of coverage is included in their D&O policy. Most D&O policies exclude fiduciary liability exposures as well as those exposures pertaining to the Employee Retirement Income Security Act (ERISA).

ERISA also broadly defines the types of employee benefit plans for which fiduciaries are responsible. This extensive list can include pension plans, profit sharing plans, employee stock ownership plans (ESOPs), and even health and welfare plans.

Moreover, designated fiduciaries are not the only targets of such lawsuits; targets can also include the employer and even the plan itself. Claims can be brought by plan participants, participants’ legal estates, the Department of Labor, and the Pension Benefit Guaranty Corporation. Such claims may include allegations of:

 

 

 

 

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