Insurance Coverage Lines

Fiduciary Responsibility

In accordance with the Employee Retirement Income Security Act (ERISA) of 1974, designed to protect the rights of employees participating in private pension plans, fiduciary liability insurance insures against errors and omissions made by a designated fiduciary in the administration of employee benefit programs, whether intentional or unintentional. Any employee or organization who has discretionary authority over a plan or who assists in its management can be a fiduciary and thus can be held personally liable for any losses.

Coverage typically addresses the following activities:

• Informing employees of the availability and participation requirements of a pension plan
• Shortages in the benefit plan's assets due to a breach in fiduciary duty, such as improper investment of funds
• Interpretation of the plan's benefits
• Enrollment and record handling
• Cancellation or termination of employee participation in the plan

A similar type of insurance, employee benefits liability, is often endorsed onto a commercial general liability insurance policy, but is far less comprehensive than the above mentioned program. It is very important to recognize these differences to ensure that your organization is adequately insured, especially when dealing with vast plan assets.

Definitions – Terms of Insurance

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