As a business owner, you deal with dozens of insurance policies. Deciding what you need is confusing. Nowhere is that more evident than comparing fiduciary liability insurance vs directors and officers coverage. To understand what each policy covers and why you need both, read on.
Fiduciary Liability Insurance
Fiduciary liability insurance covers more than the business’s directors and officers, it protects everyone involved in maintaining your company’s retirement offerings, from the data entry clerk that adds funds to outside advisors that recommend holdings. This insurance protects your fiduciaries in case of lawsuits related to:
- 401(k) plans fees.
- investment options in a defined benefit pension plan.
- employee investment in company stock.
- healthcare plan administration.
Directors and Officers Insurance
A D&O policy also protects the individuals in your company but specifically from actions that arose from serving as a director or officer of the company. These policies generally exclude fraud and criminal behavior, but otherwise provide protection for your business and its leadership. This policy covers a variety of potential lawsuits, such as:
- conflict of interest.
- negligence of duty to the company.
- errors in judgment.
- misrepresentation of the company or its financial standing.
Lawsuits in both areas are increasing and legal costs are high even if your business or employee wins, so having at least some coverage under both policies protects your finances.