Independent Insurance Agent and Risk Manager
Licensed in PA NJ NY MD DE NC TN VA WV

Fiduciary Liability Insurance

Fiduciary Liability Insurance provides coverage for the following:

Assets of the plans offered by the insured

Assets of the named insured

Personal assets of fiduciaries of the insured’s firm

[Fiduciaries mean any of the directors, officers or trustees, or any past, present or future employees of the organization who are fiduciaries as defined in ERISA (Employment Retirement Income Security Act) with respect to any plan.]

A Fiduciary is one who:

Exercises any discretionary authority or discretionary control in managing the plan or exercises any authority or control in managing or disposing of its assets

Renders investment advice for a fee or other compensation, with respect to any monies or other property belonging to the plan

Plans subject to ERISA include:

Pension Plans (not an all-inclusive list)

Profit Sharing

Employee Stock Ownership Plan


Plans not subject to ERISA include:

Workers Compensation

Unemployment Compensation

Disability Insurance

Welfare Plans (not an all-inclusive list)

Life Insurance

Hospital, Medical, Dental, Accident Insurance

Disability Income (not disability insurance)

Types of Fiduciary Claims may include:

Plan Mergers/Terminations – when plans are terminated as a result of company mergers and in the process possible reduction in pension benefits may occur

Negligence – If a pension fund is unable to pay promised benefits because it has been seriously under funded for a long time

Imprudent Investment – When a high percentage of the pension fund’s assets are invested in a single company’s common stock, the plan may then suffer a severe loss when the stock is rendered worthless if that company files for bankruptcy.

NOTE: Confusion often arises between the need for fiduciary liability and employee benefits liablity. Fiduciary Liability covers claims alleging breach of duties as specified by ERISA (e.g., failure to invest plan assets prudently). Employee Benefits Liability covers claims involving administrative errors pertaining to pension and benefits plans (e.g., failing to
name an intended beneficiary on a life insurance policy)

Above material reprinted with permission from Gateway Specialty Insurance.

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