Why Insurance Clients Should Consider Getting Fiduciary Liability Coverage

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Any company that provides employee benefit plans is likely to have fiduciary duty and associated responsibilities, which makes getting fiduciary liability coverage as part of their total insurance coverage a necessity. Fiduciary duty means a business or other entity is responsible for taking actions that are financially beneficial to another party, and this responsibility entails several key liabilities. Here’s why these insurance clients should consider getting fiduciary insurance protections.

Companies That Provide Benefits Plans Have Fiduciary Duty

In general, a company is said to have fiduciary duty to employees and others if it provides certain types of benefits plans. These plans may include, but are not limited to:
·     Pensions
·     Savings plans
·     Healthcare policies
·     Stock options
·     Retirement plans
·     Profit share agreements

In Case of a Breach, Fiduciary Liability Insurance Is Essential

Fiduciary liability insurance is especially helpful when a claim is made against a company or when certain breaches occur. Examples of such breaches could include:
·     Breach of contract
·     Mismanagement of funds
·     Illegal financial transfers
·     Management errors and omissions
·     Denial of benefits
·     Lack of due diligence in overseeing third party operations

For companies that provide benefits plans to employees or otherwise hold the responsibility to act in a third party’s best financial interest, obtaining adequate fiduciary liability coverage is foundational. If you operate a business that provides one of the above plans, make sure to include fiduciary coverage among your insurance policies.