ERISA Fidelity Bond Quotes & Fiduciary Liability Insurance Quotes
2016-03-10
Do you have insurance for common, but costly, mistakes in handling employee benefit plans like retirement and group health & benefits?
If you already have a regular business liability insurance policy, you may have some protection for employee benefit plans, like Employee Benefit Liability Insurance (EBL), as an additional coverage.
Unfortunately, an EBL policy typically excludes any claims based upon “failure of any investment to perform as represented by an Employer,” “advice given by an Employer to participate in any Employee Benefit Plan” and “insufficient funding”, among other exclusions.
These types of exclusions in an EBL policy can lead to major coverage issues in the event of an unfortunate claim, and if your benefit/retirement plan is governed by ERISA, which most are, plan participants have the right to sue not only your business, BUT ALSO come after YOUR PERSONAL ASSETS, if you breach your fiduciary duties.
Take a look at these claim examples:
- A class action lawsuit was filed by more than 190 plan participants that alleged the owners (or trustees) of the 401K plan breached their fiduciary duty under ERISA by not only failing to diversify investments, but also by changing certain valuation rules prior to the retirement of some employees. Over $1M in attorney and settlement fees were paid out by the employer because they did not have Fiduciary Liability Insurance.
- A small manufacturing company that offered welfare plans for long-term disability and life insurance failed to notify the life insurance company that premium payments would be suspended for one of their employees who was out on long-term disability. As a result, the life insurance coverage for this individual was terminated. When the employee died and the life insurance company denied payment due to the fact that premium payments had not been made, the estate of the deceased employee sued the fiduciaries of the plan. The fiduciaries were ordered to pay $52,000.
- A small company established a 401k plan for its employees. The company named itself as the plan’s fiduciary and the company president served as the plan trustee. The plan hired an outside money management firm to manage its plan assets. The investment firm provided the plan with regular, but limited performance data. When the company hired a new controller, he became concerned over the lack of investment data and informed the company president, who did not take immediate action. When the president finally did make an attempt to withdraw the funds from the investment firm, it was too late. The investment firm was bankrupt. The court held that the company and the company president violated their fiduciary obligations be selecting an unfit money manager and not exercising reasonable diligence in monitoring the money manager’s performance. The court ordered that both the company and the president, personally, pay the plan more than $635,000.
- A financial services firm maintained a defined benefit plan. The trustee of that plan failed to amend the plan in a timely fashion to comply with tax law changes. As a result, the Internal Revenue Service disqualified the plan. Subsequently, the trustees entered the IRS Closing Agreement Program and paid the IRS $142,000 to have the plan’s “qualified” status restored. New trustees were appointed, and they sued the old trustees for breach of fiduciary duty for failure to maintain the tax “qualified” status of the plan. The old trustees consented to a judgment of $294,000.
Fiduciary Liability Insurance Quotes
So, what’s the solution? Fiduciary Liability Insurance- This policy is formed to adhere to the ERISA requirements placed on fiduciaries. It responds to claims for damages arising out of improper investments, plan and employee advice, insufficient funding and more based on policy terms.
ERISA Fidelity Bond Quotes
Do you have an ERISA Fidelity bond for your company retirement plan? Unlike Fiduciary Liability Insurance, which is not required by law, if you offer a retirement plan to your employees then you’re required by law to maintain an ERISA Fidelity Bond by law. This protects the plan assets from employee fraud.
InsuranceTrak Services is here to be your trusted advisor when it comes to making sure you have the most comprehensive liability and bonding coverage for your employee benefit and retirement plans!
