Fiduciary Liability Insurance
Managing an employee benefit plan comes with serious legal responsibilities. Fiduciary liability protects the people who administer those plans from personal financial exposure when something goes wrong.
If you manage a benefit plan, you're a fiduciary — and that comes with personal liability.
Under ERISA — the federal law governing employee benefit plans — anyone who exercises discretionary authority over a plan's management or assets is considered a fiduciary. That includes HR managers, CFOs, benefits committees, and business owners who administer 401(k) plans, pension plans, group health plans, and other employee benefit programs.
Fiduciary liability insurance covers the cost of defending and settling claims that allege a breach of fiduciary duty — including allegations of imprudent investment decisions, failure to follow the plan document, improper plan administration, or failure to properly communicate plan benefits to participants.
General liability and D&O policies typically exclude ERISA-related fiduciary claims. Fiduciary liability is a standalone coverage that fills that specific gap — protecting the individuals responsible for plan decisions and the organization itself.
What this coverage does for you
- Covers claims alleging breach of fiduciary duty under ERISA
- Protects plan administrators, trustees, HR staff, and benefits committees
- Covers legal defense costs, settlements, and judgments
- Applies to 401(k), pension, group health, welfare benefit, and other ERISA plans
- Covers the cost of correcting administrative errors (with some carriers)
- Often bundled with D&O and EPLI as part of a management liability program
What fiduciary liability covers.
Claims under ERISA can be costly and complex. Fiduciary liability keeps the financial exposure off the personal assets of the people managing your plans.
Investment Decision Claims
Claims alleging that plan assets were invested imprudently — including allegations of excessive fees, poor fund selection, or failure to monitor investment options. Among the most common fiduciary claims.
Plan Administration Errors
Claims arising from administrative mistakes — failure to enroll eligible employees, incorrect benefit calculations, late distributions, or failure to comply with plan documents. Coverage extends to the cost of correction in many policies.
Failure to Communicate
Claims that participants were not properly informed of their rights, plan terms, or changes to benefits. Includes failure to provide required notices under ERISA, ACA, and other applicable regulations.
Conflict of Interest Claims
Allegations that a plan fiduciary acted in their own interest rather than the interest of plan participants — including prohibited transactions or self-dealing under ERISA Section 406.
Benefit Denial Claims
Claims by participants who were denied benefits they believe they were entitled to under the plan. Covers defense costs and any covered settlement or judgment amounts.
DOL & IRS Investigation Defense
Covers defense costs when a plan is subject to a Department of Labor or IRS investigation or audit. Government investigations are expensive to respond to even when no wrongdoing occurred.
Common questions.
Any employer that sponsors an ERISA-covered benefit plan — including 401(k) plans, pension plans, profit-sharing plans, and group health plans — has fiduciary exposure. This includes small businesses, nonprofits, and any organization with employees who participate in a sponsored benefit plan.
Usually no. Most D&O policies specifically exclude ERISA fiduciary claims. Fiduciary liability is a standalone coverage designed for this exact exposure. Some management liability packages bundle D&O, EPLI, and fiduciary together, but each coverage needs to be specifically included.
An ERISA fidelity bond protects the plan against dishonest acts by plan officials — theft, fraud, embezzlement. It's required by law for most ERISA plans. Fiduciary liability insurance is different — it covers claims of errors, omissions, and breach of duty in administrating the plan, and it's not legally required but strongly advisable.
Yes, and they're increasing. 401(k) fee litigation has grown significantly over the past decade, with lawsuits filed against both large corporations and smaller employers. Even businesses with well-managed plans can face claims — defense costs alone can be substantial regardless of outcome.
Some policies include coverage for the cost of voluntary correction programs — like the IRS VCP or DOL VFCP — that allow plan sponsors to self-correct errors and avoid larger penalties. This varies by carrier and policy form, and we'll help you evaluate what's included.
Protecting the people who manage your plans.
If you sponsor a 401(k), pension, or group benefit plan, you have fiduciary exposure. Let's make sure the right people are protected.