The goal of fiduciary liability insurance is protecting business and employer assets against claims of mismanagement of the company’s employee benefit plans. Fiduciary liability insurance claim examples have exploded in recent years. This has resulted in the need for tailor-made policies that fit the industry, size and type of benefit plan.
Employee benefit plans are not just retirement plans. They can be savings, health/welfare plans or profit-sharing as well. New fiduciary rules create increased liability for individuals and organizations at all levels. Some examples of risk are listed below:
- Administrative Errors. An employee wishes to participate in a 401K plan. The necessary forms are completed and submitted. If the contribution percentage is miscommunicated, and financial loss occurs, the plan trustee can be held liable.
- ESOP violations. A CEO, COO or another company fiduciary allegedly sells shares for a severely inflated price per share as the result of a fraudulent appraisal. The Department of Labor can launch an investigation and bring a suit against them.
- Failure to Disclose. An organization changes medical insurance without notice that the coverage has changed or been reduced. Employees may have unpaid medical bills as a result. A claim can be brought against the company and plan trustee.
Fiduciary liability claim examples range from failure to disclose or enroll, to tax violations and administrative errors. Flexible, intelligent coverage solutions can be adjusted to meet company needs to reduce risk.