Does Insurance Cover 401(k) Lawsuits?
Fiduciary liability insurance may cover certain claims over 401(k) management; an ERISA bond instead protects the plan against covered dishonest handling losses.
Employees may sue over benefits or alleged fiduciary breaches. Compare the complaint with both contracts because a bond does not pay ordinary liability claims.
For an existing demand, preserve it and follow the applicable policy’s notice and consent requirements promptly. For a renewal, schedule the 401(k) and all relevant insureds; compare prior-acts and prior-known-matter provisions, defense costs, benefit-payment or restitution terms, and limits. Check whether the ERISA bond remains adequate too. Do not assume that having a bond, D&O, or a general “management liability” package resolves every 401(k) allegation.
