What Does Fiduciary Liability Insurance Cover?

The grant of coverage depends on the policy. In the Travelers FRI-3001 specimen, the insuring agreement responds to a claim first made during the policy period for a defined wrongful act; that definition includes alleged fiduciary-duty breaches and certain negligent employee-benefit administration errors. Its definition of loss includes defense expenses and specified amounts an insured must pay, but it also carves out some amounts, including benefits ordinarily due under the plan, with stated exceptions. DOL describes the underlying duties.

Do not assume that a coverage label promises payment for every plan dispute, benefit shortfall, fine, or correction cost. Check the actual insuring agreement, definitions, exclusions and exceptions, scheduled plans and insureds, limit, retention, claims-made and reporting provisions, and whether defense expenses erode the limit. Ask whether any requested extensions or endorsements are included in the quote and obtain the issued forms before relying on them.