Fiduciary Liability

With the changes to the Obamacare, and the DOL rule, it is crucial that employers protect themselves if they have benefits programs. Many employers don't realize they can be held liable for a benefits plan that wasn't properly set up for its employees. 

 

Fiduciary Liability Insurance provides legal defense expenses, settlement/judgement costs and fines and penalties for Wrongful Acts committed by a Fiduciary, Administrator and/or Sponsor Organization of a Covered Plan.  This exposure is specifically EXCLUDED in EVERY OTHER insurance policy a company carries. It's important to understand that last point because many times, employers think their General Liability policy will cover such acts when it won't. 

 

Wrongful Act:  a violation of any of the responsibilities, obligations or duties imposed upon fiduciaries by ERISA with respect to a Covered Plan solely by reason of his, her or its status and duties as Fiduciary of a Covered Plan.

 

Wrongful Act: as respects an Administrator: any act, error, or omission solely in the performances of the Administration of a Covered Plan and solely by reason of his, her or its status and duties as an Administrator of a Covered Plan.

 

Who's Covered:

  • Entity, its Directors, Officers and employees

  • Entity’s employee benefit plans

  • Non-employee Administrators of plans (by endorsement)

Allegations Include:

  • Wrongful denial or improper change in benefits

  • Error or omission in plan administration

  • Improper advice or counsel

  • Fiduciaries engaging in a prohibited transaction

  • Failure to administer the plan according to plan documents

  • Conflict of interest

What is Covered:

  • Legal defense costs

  • Investigation defense costs

  • Fines and Penalties (HIPAA, HITECH, COBRA, ERISA 502©)

  • EPCRS Coverage (IRS resolution channel)

  • Settlements/Judgement costs

  • Imprudent investment of assets or lack of investment diversity

  • Imprudent selection and failure to monitor third-party service providers

  • Exorbitant management fees paid to 401(k) managers  

Key Policy Terms

  • Average Premium under $3,000 including Broker Fees (plans under $25M in Assets)

  • Typical Policy Limit $1M to $2M, available with $0 Deductible

  • Admitted Paper

  • Non-rescindable coverage for non-indemnified loss

  • Full Severability all exclusions

  • Settlor coverage (for non-employee administrators) included

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