Fiduciary Liability Insurance Handbook Posts

The following are excerpts from the Fiduciary Liability Insurance Handbook, The Definitive Guide for Fiduciaries and Advisers of Employee Benefit Plans. To obtain a copy of the Handbook or to view other excerpts, please visit our Handbook website www.fiduciaryliabilityhandbook.com or for additional company information visit www.euclidspecialty.com.

What is Waiver of Recourse?

What is Waiver of Recourse?  The ERISA-mandated recourse provision discussed in the preceding section – which applies if the fiduciary insurance is paid out of plan assets – means that a breaching fiduciary’s personal assets would still be at risk for all losses caused by the fiduciary notwithstanding the fiduciary insurance policy. To prevent the right of the insurer to recoup any payments from...

Who Can Pay for Fiduciary Insurance?

Who Can Pay for Fiduciary Insurance?  ERISA does not require that a benefit fund or trustee purchase fiduciary insurance, but a fiduciary faces significant personal exposure without it. Importantly, ERISA generally prohibits a benefit fund from excusing a fiduciary from liability for breaches of duty or using fund assets to pay such liability, even if the breach was unintentional or in good...

What is an ERISA Fidelity Bond? What Do You Need in Your Plan’s Bond?

What is an ERISA Fidelity Bond and What do you need in your plan’s Fidelity Bond? Fiduciary liability insurance and fidelity bonding are easily confused. A fidelity bond is a contract under which the issuer of the bond, typically a surety company or an insurance carrier, agrees to reimburse a benefit fund for losses caused by theft, fraud, or other dishonest acts covered by the bond. A fidelity...

What is Fiduciary Liability Insurance?

A fiduciary liability insurance policy is a contract designed to protect plan trustees, other fiduciaries and the employee benefit plan against claims alleging breach of their fiduciary duties to the plan or claims alleging they committed an error in the administration of the plan. The insurance carrier issues the insurance contract to the plan itself or to an employer that sponsors an employee...

What is Covered Under a Fiduciary Liability Insurance Policy?

The modern fiduciary liability insurance policy will offer four basic coverage grants: (1) breach of fiduciary duty; (2) negligence in the administration of the plan; (3) voluntary compliance programs; and (4) regulatory penalties. 1. Breach of Fiduciary Duty: The primary coverage grant in a fiduciary liability policy is for breaches of fiduciary responsibility under ERISA or other applicable...