The fiduciary duties within a company can be the responsibility of employees at any level, such as directors, officers or general staff. Third-parties outside of the establishment can also perform these tasks. Regardless of who performs the duties, fiduciary liability insurance exists to protect that person and the company employing them from legal liability in the event of a lawsuit. These lawsuits can result from a wide range of errors or failures on the part of the fiduciary, from failing to monitor the performance of investments to not paying attention to rates charged by plan administrators. Notwithstanding the source of the lawsuit, the cost of defending against the legal action and the damages and judgments that result from it can force an unprepared company to shut their doors forever.
Fiduciary liability insurance covers a wide range of areas that often result in fiduciary claims, including conflicts of interest, the improper filing of required reports and incorrect plan eligibility determination. While many fiduciary liability claims involve the specifics of the execution of the fiduciary duties, even the selection of an unsuitable service provider can result in a fiduciary lawsuit against a company.
A good fiduciary liability policy not only protects the business, but it also protects the employee or employees entrusted with the fiduciary duties. If you’re a business owner, review your insurance package and make sure your company has the right fiduciary liability coverage today.