Is Fiduciary Liability Insurance Required?

ERISA § 410(b) permits a plan, fiduciary, employer, or employee organization to purchase insurance for potential fiduciary liability. The statute does not generally mandate that purchase. This is different from ERISA § 412’s fidelity-bond requirement: DOL explains that persons who handle plan funds or other property generally must be bonded, subject to exceptions and detailed rules. The bond protects the plan against specified dishonest or fraudulent acts; it is not a substitute for liability insurance.

A contract, lender, investor, board, or plan document could create a separate practical requirement even where ERISA does not. Check applicable plan documents and agreements, then distinguish any request for “fiduciary insurance” from a required ERISA bond. For a bond, verify which handlers are covered and the required amount. For liability insurance, review policy scope, insureds, exclusions, limits, and dates; don’t assume one product satisfies the other requirement.