If so, and you or an employee are involved in any way with the management of that plan, then you are likely considered a fiduciary. This means you can be held personally liable for what happens to the plan under ERISA law. As standard General Liability Insurance policies exclude claims for ERISA violations, you cannot rely on those policies for protection in case of litigation. This is true even if you have hired a service provider to implement a plan for you. According to the Department of Labor, it is the responsibility of the fiduciary to vet and monitor any outside vendor.
Defending a New York Fiduciary Liability claim can be extremely expensive and time consuming. According to a recent survey, the average cost of a paid claim was $994,000 with defense costs of $365,000. These defense costs could be incurred even if the case is without merit and there are more than 9,000 ERISA lawsuits files each year.
Why should you consider Fiduciary Liability Insurance for your business?
- A fiduciary can be at risk if they breach their duties and be personally required to make the plan whole for any losses they caused.
- Defending and resolving ERISA suits costs time and money and 69% of substantive ERISA litigation is resolved in favor of the plaintiffs.
- You cannot avoid liability solely by blaming plan participants for their investment decisions. Fiduciaries are responsible for providing a broad range of investment alternatives and minimizing the expenses associated with those investments. Since 2006, the plaintiff’s bar has recovered more than $170 million for excess expenses.
- A fiduciary can be sued for not following the plan documents and plan participants regularly sue claiming denial of benefits in violation of plan documents. More than 9,000 ERISA lawsuits are filed each year on average.
While offering a benefit plan to your employees is a way to attract and retain good talent, it is essential that you protect that benefit with the right Fiduciary Liability Insurance here in New York. This coverage is critical to the well-being of your company and will protect you or any employee who manages your benefits plans from litigation.
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The Gerard P Smith Insurance Agency in Rochester NY knows Fiduciary Insurance. To learn more, contact our office at 585-872-5700 or fill out the quote form above.