Fiduciary Liability Insurance
When it comes to business, there are a lot of things that can go wrong. From unhappy customers to faulty products, there are a multitude of risks that companies face on a daily basis. One of the most serious risks is the possibility of being sued for fiduciary liability. This type of liability arises when a company is accused of breaching its fiduciary duties, which can include anything from mismanaging employee retirement accounts to failing to disclose conflicts of interest. Fiduciary liability insurance helps to protect businesses from the costs of defending against these types of lawsuits, as well as any damages that may be awarded if the company is found liable. For businesses that handle sensitive employee information or manage large amounts of money, fiduciary liability is an essential piece of risk management.
There are risks involved in carrying out the role of a fiduciary. An employee can sue a fiduciary without proof of any wrongdoing, leading to financial losses for your business.
Cost of Fiduciary Liability Insurance
Fiduciary insurance policies are very affordable and vary depending on the type of business, size, location, revenue, number of employees, etc.
Who requires Fiduciary Liability Insurance?
Fiduciary insurance is not a requirement by law. However, companies that offer employee benefits should consider getting the cover.
Small businesses do not need to have insurance coverage since they do not offer their employees benefit packages like retirement benefits.
Any business offering these benefits should have fiduciary coverage.
- Dental insurance
- Optical insurance
- Health insurance
- Retirement benefits-401(k) or 403(b)
Protecting your business from lawsuits is essential. Legal fees and settlements can be costly for your business which has the potential of losing your livelihood.
What Fiduciary Liability Insurance covers
Legal defense
The policy covers the legal defense costs within the limits of the policy and settlements from the lawsuit.
Personal Liability
As a business, you can be sued for wrong or delayed balance transfers, not following investment plans, lack of diversifying plans, etc. leading to personal liability lawsuits.
The insurance protects against such risks.
Administrative Errors
Handling records, employing, or terminating employees can cause a lawsuit regarding how the plan was is carried out. Such errors are covered by fiduciary insurance.
Other breaches covered by fiduciary liability Insurance include
- Improper counsel or advice
- Inappropriate changes to employee benefits
- Wrongful denial of company benefits
- Risky investments in pension plans
The specifics covered by the insurance depend on the policy. Consulting a reliable insurer will offer more insight into the coverage required for your business.