The risk of liability claims exists for any individual or group that design and administer employee benefit plans, including but not limited to profit-sharing, pension plans and health and welfare programs. While ERISA helped define the responsibilities and the associated liabilities for program trustees and administrators, it has also increased the need for fiduciary liability insurance.
Financial exposure is not limited to the actions, or lack thereof, of the plan trustees. They can be held responsible for the omissions, acts and errors of the entities that offer administrative and related services, such as:
- Accounting and consulting firms
- Investment management companies
- Investment advisors
- Trust departments of financial institutions
Additional Coverage Options
There are several coverage options designed to protect trustees of employee benefit plans. The most popular is a fiduciary liability insurance policy. Depending on the exposure, two other types of coverage may be appropriate. Fidelity bonds are used in situations when plan administrators or trustees have harmed the employee plans as a result of dishonesty.
Employee benefits liability insurance protects fiduciaries in the event claims are generated from errors or omissions in during the administration of a benefit plan. This may include providing improper advice or failure to enroll an employee. An insurance solution that provides for broad coverage, as well as protection for specific types of risk, can help businesses defend themselves and their employees against simple mistakes and purposefully harmful acts.