Who Is Fiduciary Liability Insurance Right For?
Companies are purchasing fiduciary insurance for their employees, who are held accountable to prioritize the interests of beneficiaries over company interests. This type of insurance has a high premium, as larger companies are deemed to pose more risk than smaller ones. Insurers also consider the claim history of financial advisors, which can lead to higher premiums. Listed below are some factors to consider when buying fiduciary liability insurance. This article aims to provide an overview of some of the most important factors to keep in mind when buying fiduciary liability insurance.
When it comes to evaluating the type of coverage required, employers should evaluate their risk. Many plans exclude routine benefit claims, such as those made by employees to fund 401(k) plans. While ERISA fiduciary liability insurance is generally adequate, it is vital to review the coverage you have and to reevaluate it periodically to ensure that it meets the needs of your organization. For example, if your company is publicly traded, you may have investments in its stock. In that case, your D&O insurance should address this challenge as well.
Another important aspect of fiduciary liability insurance is its cost. A policy of this kind is very expensive, and can cost several hundred dollars to a few thousand dollars per year. Regardless of the cost, fiduciary liability insurance is always cheaper than being sued for something you didn’t do. This is why most companies buy it along with their liability insurance policies.
Although fiduciary liability insurance covers many types of claims related to mismanagement and negligence, it is important to understand how much coverage each policy offers. For instance, the policy will cover compensation for damages, settlements, and certain penalties. You can even ask for additional coverage if you want more coverage than the standard plan provides. It’s important to consider the type of insurance policy you buy and how much it will cost. And remember that the cost of fiduciary liability insurance can increase dramatically if your plan is insolvent.
Aside from cost, fiduciary liability insurance will also cover attorney’s fees and costs if a claim is made against you. As a result, it’s important to consider how much coverage you need for the business you run. In the event of an accident, it would be costly if you are responsible for the negligence of a professional. If you were to make a mistake that could result in a lawsuit, it could lead to financial ruin. Fortunately, fiduciary insurance can help you avoid these problems.
If your fiduciary insurance policy doesn’t cover any of these benefits, you might need to seek legal coverage. Unlike in other types of insurance, fiduciary liability insurance will cover the costs of defending a claim, if you are found to have breached ERISA or other federal laws. For these reasons, it’s important to have fiduciary insurance. If you’re a trustee, you need to protect your assets against liability.