Fiduciary Liability

Sponsoring an employee benefits plan means assuming fiduciary responsibility, protecting from legal liability resulting from improper plan care.

Who is Fiduciary Liability Insurance for?

Companies offer employee benefits to attract talent, such as 401(k)s, ESOPs, welfare plans, and pensions. Benefit plan administrators are fiduciaries, and companies must also accept fiduciary responsibility. Fiduciary liability insurance covers fiduciaries.


Companies that provide employee benefits like a 401(k) plan.


People in charge of employee benefits funds or property.


Companies must prioritize integrity and momentum in addition to fiduciary responsibility.

Why you need Fiduciary Liability Insurance?

If the plan manager messes up, employees may blame everyone, even their employer. Fiduciary liability insurance is optional, unlike an ERISA Fiduciary Bond, which is required by law. This policy protects companies from legal liability related to employee benefit plan sponsorship, including defense costs, judgments, or settlements.

Calculation error

An employee claims a plan official made errors in calculating their benefits.

Improper counsel

If an employee thinks they received inappropriate investment advice.

Dispute about fees

Employees may file a lawsuit over retirement plan fees they disagree with.

Reasons for getting Fiduciary Liability Insurance

What Does Fiduciary Liability Insurance Cover

Review your policy documents to confirm your insurance coverage. Fiduciary liability insurance is optional but protects companies from legal liability regarding employee benefits plan sponsorship, including defense costs, judgments, or settlements against the company. If the plan administrator mishandles the plan, employees may blame all parties involved, including their employer. A required ERISA Fiduciary Bond provides additional coverage.

Risky investments

If a plan official makes risky investments in an employee’s retirement plan.

Bad counsel

If the retirement plan adviser provides bad advice, the employee’s investments may suffer.


If a representative mishandles healthcare or welfare plans and causes benefit loss or errors.

Improper Change

If a manager unfairly denies or alters an employee’s benefits.

Service providers

If a plan officer chooses bad service providers.

Fiduciary Liability Insurance Claim Examples

Here’s a claim example that illustrates what Fiduciary Liability Insurance covers:

Fiduciary Responsibility

As a fiduciary, you have specific responsibilities and face penalties for not meeting them. This includes plan sponsors, who can be held accountable for losses if proper care is not taken. The plan administrator, such as Vanguard, is also considered a fiduciary with control over investments.

Fiduciary Liability Insurance FAQs

Is Fiduciary Liability Insurance the Same as an ERISA Fidelity Bond?

These products are alike in addressing fiduciary responsibility, but differ in unique ways.

How Much Does Fiduciary Liability Insurance Cost?

Fiduciary liability insurance is usually inexpensive because it has a good track record for losses and is often combined with directors & officers or general liability insurance. The retention rates are usually low, and it’s typical for small businesses to have a $0 retention.

Bad stuff happens.

Imagine a policy that actually covers it.

Shoot us your email and we’ll kick off a conversation to help get you a quote on the best coverage for your brand.