Friday, January 22, 2016

What is Fiduciary Liability Insurance?

Various officers of a company, as well as other persons acting in some capacity relating to an employer's pension, savings, profit-sharing, employee benefit, and health and welfare plans can be held liable to the beneficiaries of these plans. If you oversee your company's employee benefits plans, your personal assets may be at stake without the protection of fiduciary liability insurance. Let's take a look at what fiduciary liability insurance is and why you would need it:

Who are Fiduciaries? 

A fiduciary is any individual who manages an employee benefit or pension plan.  Fiduciaries could be the plan’s trustees, investment committee members or the responsible parties who appoint those people. Even if you hire someone else to handle these plans for you, you, as the business owner, retain the ultimate responsibility for anything that may go wrong.

What is Fiduciary Liability Insurance? 

Fiduciary liability insurance protects the fiduciary against legal liability arising out of their role, including the cost of defending those claims that seek to establish such liability. If a claim is made against the policyholder of this fiduciary liability insurance, it covers the legal expenses of defending against the claim, as well as the financial losses the plan may have incurred due to errors, omissions or breach of fiduciary duty.

Why Do I Need Fiduciary Liability Insurance? 

Businesses that offer employee benefits packages that include retirement plans such as 401(k)s, Simple IRAs, 403(b)s or conventional pensions have specific fiduciary duties. A number of issues can arise when an employee feels as though fiduciary duty is breached. Fiduciaries could easily make an honest mistake in a change of forms, coverage explanations or the employee’s transfer in and out of a plan, leaving your company subject to lawsuits, fines and penalties. As the owner or decision maker, you could be named personally in a lawsuit. These claims may include allegations of improper advice or disclosure, breach of fiduciary duty, neglect in administrating a plan, lack of investment diversity or inappropriate selection of advisors or even service providers.

Talk to your Lake of the Ozarks insurance agent today to see if fiduciary liability coverage could help your company cover the expenses associated with these types of situations.While each fiduciary liability insurance policy is different, coverage is meant to fill in the gaps existing in traditional coverage offered by other policies. Insure the Lake is here to help with all your business insurance needs! Give us a call at 573-348-2794 to review your business coverage today.

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About the Author: Steve is a double back-flip insurance ninja. He was named Young Insurance Agent of the Year by the Missouri Association of Insurance Agents in 2010 and is a Certified Insurance Counselor. When he is not helping customers, he enjoys community service, Latin dancing with his beautiful wife and going on adventures with his two awesome sons.

Steve Naught, CIC
3736 Osage Beach Parkway
Osage Beach, MO 65065
Next to Golden Coral