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What is Fiduciary Liability?

By June 29, 2017February 19th, 2021Asphalt & Concrete, Business Insurance, Contractors

Many employers provide benefits to their employees, such as a 401(k) plan, health care benefits or other plans or programs designed to benefit the employees.   What happens if one of the employees receiving those benefits brings a claim against the company and the individuals overseeing those plans?   Is the company protected?   Simply getting an Employee Retirement Income Security Act (ERISA) bond will not provide this coverage.

How can a company be certain that those individuals acting as fiduciaries are compliant on all the various changes and requirements?


Fiduciary liability is a broad coverage protecting companies and individuals acting as fiduciaries overseeing employee benefit plans, 401k, pension, employee stock, health savings accounts, health plans, government-mandated insurance programs and other company sponsored plans.  Fiduciaries have a responsibility to the plan participants to administer and make decisions on behalf of the plans while keeping the best interests of the plan participants in mind.


Don’t confuse this coverage with Employee Benefits Liability insurance.  Employee Benefits Liability provides coverage to protect against the errors and omission in the administration of benefit plans, such as failure to enroll a new employee into a benefit plan or communicating inaccurate benefit elections on behalf of a participant.    Fiduciary Liability provides similar overage but is missing the enhanced protection provided to fiduciaries for the decisions made on behalf of the plan.  When the fiduciary selects new investment options that don’t provide the same return to participants as the previous options, or when they fail to disclose a reduction in medical coverage as a result of a new healthcare plan, these situations can erupt into fiduciary claims that standard Employee Benefits Liability coverage does not pick up.


Fiduciary Liability sometimes gets confused with an ERISA bond, also known as a fiduciary bond.  An ERISA bond covers the plan from loss of assets due to fraud or dishonesty.


Please contact a Rue Insurance service representative at 800-272-4RUE to learn more about this important coverage.

Scott Harrigan

About Scott Harrigan

Scott started his career in insurance in 1988 and joined Rue Insurance in 2004 as a Marketing Specialist focusing on creating effective risk financing and risk transfer programs for companies and non-profit organizations. In addition to this he is a member of the Rue Insurance educational team that provides ongoing professional development in critical insurance concepts and programs to Rue employees. About Scott | More Posts by Scott