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Often confused with Fidelity (Employee Dishonesty), Fiduciary Liability covers claims relating to the sponsorship and administration of employee benefit and welfare plans. Unlike Fidelity, Fiduciary Liability is not required under Employee Retirement Income Security Act (ERISA). Most associations have a generally low profile to ERISA liability. The ability of the DOL or PBGC to assert a claim against an individual fiduciary* is by itself, a powerful incentive for some associations to obtain coverage.
What's CoveredBreaches of ERISA or the Consolidated Omnibus Budget Reconciliation Act (COBRA) and similar state and local laws. Also covered are claims alleging misadministration of sponsored benefit or welfare plans**.
Who's CoveredThere are three categories of insured under this policy: (i) the sponsor employer, (ii) the sponsored plans and (iii) individual fiduciaries.
Value to AssociationProtects ERISA fiduciaries from claims involving breaches of ERISA and administrative errors & omissions.
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*A person is a fiduciary of any employee benefit plan to the extent that the person exercises discretionary authority or control respecting management of such plan or management or disposition of its assets, renders or has authority or responsibility to render investment advice for a fee, or has discretionary authority or responsibility in the administration of such plan. Neither title nor office controls the legal designation of fiduciary.
** coverage for misadministration is referred to as Employee Benefit Liability (EBL); EBL is often purchased in conjunction with Commercial General Liability coverage as a less comprehensive but less expensive alternative to Fiduciary Liability.