If you offer employee benefits You're likely acting as a fiduciary

The term "Fiduciary" brings to mind financial advisers, accountants, and other financial professionals, but it probably can be applied to you also if you offer benefits to your employees.

Simply defined, a fiduciary is anyone who acts in a capacity of trust when handling an employee benefit plan. Furthermore, a fiduciary is not identified by what position a person holds, but by what they do that impacts the plan. If your business provides any of the following: Profit sharing plans; 401(k); Employee Stock Ownership Plan; Stock Option Plan; Defined Benefit Plan; Health insurance of any type; Life insurance; Dental or vision; Disability insurance; Cobra benefits; Workers’ Compensation; Unemployment Compensation; or providing any other benefit, or administer such benefit plans, then you are acting in the capacity of a fiduciary.

A fiduciary is responsible for their actions in their respective capacities and as such their personal assets are exposed and at risk for these actions. Because of this it is highly important that insurance be in place to protect the fiduciaries.

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Fiduciary Risk

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Fiduciary Liability vs. Employee Benefits Liabiity

From the chart below you will see the flaws of one of the most commonly recommended methods of insuring benefit plans.  While the Employee Benefits Liability coverage only protects you from administrative errors related to your benefits plan, a Fiduciary Liability policy will protect you for a whole host of activities as shown in the illustration below.  You will also see in the illustration that you are responsible for all plans subject to ERISA law.