Since the passage of the Employee Retirement Income Security Act in 1974, fiduciary liability insurance has become a must. It sets minimum standards for private industries to provide protection for individuals in freely established pension and health plans. There are many fiduciary liability insurance claim examples.
Fiduciaries are persons or entities who exercise authority or discretionary control over plan management or plan assets. It also includes persons who provide investment advice regarding a plan or have the responsibility or authority for administration of a plan. This is a pretty all-encompassing definition. A fiduciary is responsible for running a plan for the sole interest of members and beneficiaries. This means they must minimize risks and diversify investments. They must also avoid any conflicts of interest. Any fiduciaries who do not follow these principles may be found liable.
There are several fiduciary liability insurance claim examples.
- Mishandling Funds
- Excessive Executive Salary
- ERISA Violation
- Administrative Error
- Failure to Disclose
- Tax Violation
- Failure to Enroll
Fiduciary claims can financially destroy a business or a person. Defending against a lawsuit alone can be costly regardless of whether you are found at fault. Fiduciary liability insurance can save you a lot of money and stress in the case of a claim. It is a worthwhile investment.