ERISA does not require fiduciary liability insurance, as it does fidelity bonds. Nonetheless, it is important to pay careful attention to fiduciary liability coverage.
Ordinarily, those covered by fiduciary liability insurance are:
- the plan;
- the plan sponsor;
- executives;
- board members; and
- employees.
Fiduciary liability insurance covers:
- demands for monetary, non-monetary or injunctive relief;
- lawsuits;
- arbitrations; formal civil administrative proceedings;
- formal regulatory proceedings;
- notice of a DOL fact-finding proceeding or that of a similar governmental agency;
- losses, including expenses incurred in legal defense;
- damages; judgments; settlements; pre- and post-judgment interest; and
- certain civil penalties.
Fiduciary liability insurance does not cover:
- benefits due;
- prior or pending litigation;
- fraud;
- breach of contract; or
- employment related actions.
Independent contractors and third-party service providers are not covered by fiduciary liability insurance.
Source: “ERISA: THOU SHALL NOT PAY EXCESSIVE FEES!” José M. Jara, Esq., Partner Employment, ERISA, and Employee Benefits Practice Group Leader, CKR Law. Original can be found here.
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