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Fiduciary Insurance

Fiduciary Liability Insurance offers coverage for errors or mismanagement related to employee healthcare benefit plans and retirement programs. It protects employers and plan administrators from liability arising from breaches of fiduciary duty.

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Rob Ferrini

Program Manager/Broker

Stephen Vono

Partner / Retail Manager

Fiduciary Liability Insurance (FLIP) is Essential for Protecting Employee Benefit Plans

Fiduciary Liability Insurance (FLIP) is one of the most crucial yet often misunderstood insurance products. It provides essential coverage for individuals responsible for managing or administering employee benefit plans, from top corporate executives who hire investment managers to payroll clerks handling enrollment forms. As the frequency of costly litigation and regulatory scrutiny increases, employers and plan fiduciaries are being held more accountable than ever for their actions, or lack thereof, in managing these plans. FLIPs offer protection against potential liabilities in today’s complex legal environment, making them a vital component of any comprehensive risk management strategy for businesses managing employee benefit plans.

Fiduciary Insurance Coverage Details

Negligent Administration / Management

Failing to appoint a trustee or manage the plan in a timely or appropriate manner.

Administrative Errors and Omissions

Not processing employees’ requests correctly, such as failing to enroll or make changes to benefit elections.

Conflicts of Interest / Prohibited Transactions

Choosing an investment strategy that benefits a fiduciary or involves prohibited transactions that are not in the best interest of plan participants.

Imprudent Selection or Failure to Monitor Third-Party Service Providers

Selecting or failing to monitor third-party providers, like a plan operator, who fails to make timely contributions or performs poorly.

Poor Investment Decisions / Negligent Investment Practices

Making poor investment decisions, such as a lack of investment diversification, that negatively impact plan participants.

Improper Use of Retirement Funds

Using employee retirement funds for other purposes or investments not permitted under the plan rules, such as leveraging funds.

Charging Excessive Fees

Failing to disclose or address higher fees, which can negatively impact the financial performance of the plan.

Wrongful Denial / Improper Change in Benefits

Reducing benefits or wrongfully denying benefits to employees, such as changing their hours to avoid paying benefits.

Improper Advice or Counsel

Providing poor advice or counsel, such as missing important enrollment deadlines or giving incorrect guidance regarding plan options.

Professions we insure.

“McGowan Professional has been one of the easiest companies to work with. This year Fruci & Associates, PS acquired a subsidiary firm that performs PCAOB audits and attest services, which is work outside of the scope of our current accountants professional liability coverage.

Accountants & CPAs

Bookkeepers

Investment Advisors

Lawyers

Frequently asked about Fiduciary Insurance

Why is Fiduciary Liability Insurance necessary if ERISA bonds and EBL coverage exist?

While ERISA bonds and EBL coverage provide certain protections, they do not fully cover fiduciary exposures, such as breaches of fiduciary duty. Fiduciary Liability Insurance (FLIP) is necessary to provide comprehensive protection against these risks.

What is Fiduciary Liability Insurance (FLIP)?

Fiduciary Liability Insurance (FLIP) is designed specifically to protect fiduciaries against claims related to breaches of fiduciary duty and other fiduciary exposures. It is the only type of insurance that fully covers fiduciary risks.

How does an ERISA bond differ from Fiduciary Liability Insurance?

ERISA bonds, required under Section 412(a) of ERISA, are designed to protect the plan and its participants. They provide first-party coverage to safeguard against fraud or dishonesty by employees who handle plan funds or property. However, they do not cover breaches of fiduciary duty.

Does Employee Benefits Liability (EBL) coverage protect fiduciaries?

No, Employee Benefits Liability (EBL) coverage, which is typically added as an endorsement to a general liability policy, offers limited protection. It only covers errors in plan administration (such as failure to enroll or improper eligibility advice) but does not cover breaches of fiduciary duty, like imprudent investments or negligent selection of service providers.