As a business owner, you may feel like there’s a new policy you hear about every day. Sometimes it may feel overwhelming but these policies protect you from situations that you may not have considered but that put your business financials at real risk. Fiduciary liability insurance is one type of policy to consider. Here are two benefits to this policy.
1. Protect From Benefit Mismanagement
The Employee Retirement Income Security Act of 1974 (ERISA) holds businesses and individuals working within the business responsible for managing employee benefits. Mismanaging those benefits can result in claims that won’t be covered by employee benefits liability insurance. Mismanagement implies purposeful action, but even the most well-meaning mistake that results in denial of a claim could potentially trigger a lawsuit. Benefit mismanagement includes:
- Failing to monitor third-party service providers
- Offering imprudent retirement fund selections
- Wrongfully denying claims
- Improperly changing benefits
- Providing improper advice
2. Pay Legal Fees From Claims
Besides protecting your assets in the case of a mismanagement claim, fiduciary liability coverage allows you to have the best legal representation possible to fight the claims in the first place. The cost of defending your business and your reputation can be prohibitive and cause as much havoc as the claim itself.
Fiduciary liability coverage protects you from the moment a claim of mismanagement is made through to claim resolution.