Getting Personal: Insuring Fiduciary Responsibilities
Being asked to serve on a board or to help manage a company can be a very rewarding experience. Challenges will come, of course, as will moments of success and victory. Yet the wise leader will always make sure he or she is protected from damage or loss, and in this case, that can take the form of fiduciary-related lawsuits.
Fiduciary liability insurance helps to protect the personal assets of company fiduciaries, as well as the financial assets of the company and employee benefit plans against lawsuits. This specialized area of insurance also pays for legal defense and may include provisions for the insurer to provide expert legal counsel.Employers are increasingly being held accountable for the benefits options they offer employees. Under the Employee Retirement Income Security Act of 1974 (ERISA), fiduciaries can be held personally liable for losses to a benefit plan incurred as a result of their alleged errors or omissions or breach of their fiduciary duties.Allegations made in fiduciary liability claims may include:
- Denial or change of benefits.
- Administrative error.
- Improper advice or counsel.
- Wrongful termination of plan.
- Failure to adequately fund a plan.
- Conflict of interest.
- Imprudent investment of assets or lack of investment diversity.
- Imprudent choice of insurance company, mutual fund, or third-party service provider.
Some leaders of privately held companies may not believe that retirees would sue their companies, and they may be right. But playing those odds would indeed be a gamble, since fiduciaries without adequate fiduciary liability insurance coverage may be forced to pay out of their own pocket for lawsuit defense costs, judgments, and settlements.The team of experts at The Reschini Group can advise you on exposure and the proper insurance to cover your fiduciary responsibilities.Because you don’t want a situation like this to get personal.
Copyright 2017 The Reschini GroupThe Reschini Group provides these updates for information only, and does not provide legal advice. To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.