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Fiduciary-Liability

For many business owners, providing a great benefit plan is an effective method of attracting and retaining excellent employees. However, without Fiduciary Liability Insurance the personal assets of those who sponsor or administer employee benefit plans such as pension plans, 401k’s, profit-sharing plans, employee stock ownership plans (ESOP) or health and welfare plans are at risk.

What is a fiduciary?

A fiduciary is a person or an institution that has been granted authority to act on behalf of others. Fiduciaries are expected to be trustworthy, honest and loyal. Persons making decisions regarding employee benefit plans are fiduciaries, and can be held personally liable for losses to benefit plans resulting from their errors, omissions or beaches of fiduciary duty.

Why an ERISA bond is not enough

The Employee Retirement Income Security Act (ERISA) requires every employee benefit plan to be covered by a fidelity bond to protect plan assets from theft by the plan fiduciaries. But the responsibilities of the fiduciaries extend far beyond that. Fiduciaries can be sued personally for breaching their duties is a variety of ways including:

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  • Failing to adequately vet and monitor providers such as insurance companies and mutual funds

  • Providing improper advice to plan participants

  • Failing to adhere to plan documents and guidelines

  • Failing to provide a broad range of investment choices

  • Failing to adequately control expenses

  • Improperly denying or reducing benefits

  • Conflict of interest

  • Failing to act in the best interest of the those participating in the plan


Fiduciaries without Fiduciary Liability Insurance may be required to pay legal fees and judgements from their personal assets. Fiduciaries can and should reduce their risk by relying on the advice of experts. But they can not completely eliminate their personal liability.


Fiduciary Liability insurance from Hortica protects and defends fiduciaries and helps put their minds at ease. Properly protected, fiduciaries can confidently go about their business of managing employee benefit plans. That’s good news for your employees, and good news for your business!