Employee-benefits fiduciary liability insurance

If your company sponsors a retirement or health plan, the people who run that plan have legal duties to the employees in it. Fiduciary liability insurance covers claims that those duties were breached.

This is about your own employees’ benefits. It is separate from the duties an investment adviser owes to clients, which fall under E&O. Cilantro Risk arranges both and keeps the two straight.

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Which plans and people are covered

A policy covers the plans and people it defines. That means each plan, the entity that sponsors it, and the people who make decisions about it or administer it.

We check your list against the policy. Plans that were recently started, closed, or picked up in an acquisition are the ones we look at first.

Fiduciary liability is not the fidelity bond

An ERISA fidelity bond protects the plan if someone handling its money commits fraud or theft. Fiduciary liability insurance protects the people running the plan if they’re accused of breaching their duties. They cover different problems.

The Department of Labor says fiduciary liability insurance doesn’t satisfy ERISA’s bonding requirement. It’s an easy pair to mix up, and we’ll tell you which one you have. Your plan’s advisers can confirm what your plan is required to carry.

What a claim can look like

Claims can involve plan fees, the choice of service providers, or mistakes in administering the plan. Whether a policy covers each of those depends on its terms. Administrative errors are sometimes handled by a separate part of the policy, and regulatory matters and penalties are often treated differently from an ordinary claim.

For each policy, we set out:

Which plans, sponsors, committees, and people are covered
How legal fees and the retention work
The rules for reporting a claim and getting consent
Whether this coverage shares a limit with D&O or EPL

When to call us

A new plan, an acquisition, a change of provider, or a renewal are all good times. Send us your current policies, the fidelity bond, and a summary of each plan.

We’ll help you keep three things straight: duties to your plan, duties to your clients, and protection against theft. Your plan’s legal and benefits advisers should weigh in on what the law requires.

Common questions

Is this the same as an RIA’s E&O insurance?

No. E&O covers the services an adviser provides to clients, including services to other companies’ plans. Fiduciary liability covers your responsibility for your own employees’ benefit plans.

Does a fidelity bond replace fiduciary liability insurance?

No. The bond protects the plan against fraud or theft. Fiduciary liability covers claims that the plan’s fiduciaries breached their duties.

If we outsource plan administration, is the question settled?

No. Outsourcing hands off tasks, not necessarily all of the responsibility. We look at what the service agreement gives the provider and what stays with your firm, then check the policy against that.

Talk to us about your insurance

Tell us about your business, what you’re trying to decide, and any deadline. We’ll follow up to set up a call. You don’t need to upload anything now.