Fiduciary Liability Insurance
Many cannabis companies sponsor employee benefits plans, helping attract new talent to their workforce. Consider the benefits of 401(k) plans, employee stock ownership plans (ESOPs), welfare plans, and pension plans, to name a few. Benefits plan administrators are undoubtedly fiduciaries; however, cannabis companies sponsoring the employee benefits plan also must accept fiduciary responsibility.
Who is Fiduciary Liability Insurance for?
Many cannabis companies sponsor employee benefits plans, helping attract new talent to their workforce. Consider the benefits of 401(k) plans, employee stock ownership plans (ESOPs), welfare plans, and pension plans, to name a few. Benefits plan administrators are undoubtedly fiduciaries; however, cannabis companies sponsoring the employee benefits plan also must accept fiduciary responsibility.
If the plan administrator miscalculates, mishandles, or practices improper plan care, employees will blame all parties involved, including their employer. Fiduciary liability insurance is optional, unlike an ERISA Fiduciary Bond, which is required by law. This policy protects companies from legal liability related to employee benefits plan sponsorship. It covers defense costs, judgments, or settlements against the company.
Fiduciaries
Plan trustees and other fiduciaries that administer or oversee employee benefit plans often face lawsuits alleging asset mismanagement.
Directors & Officers
Aside from frequently holding direct fiduciary responsibility, directors and officers must maintain integrity and momentum.
Sponsors
Businesses who sponsor an employee benefits plan, such as a 401(k), can encounter a fiduciary liability lawsuit.
Why you need Fiduciary Liability Insurance?
Protects from legal liability when sponsoring employee benefits plans
Protects employees’ retirement plans
Easily bundled with other must-have risk management policies
Why you need Fiduciary Liability Insurance?
Improper Counsel
Suppose an employee feels that they were improperly counseling regarding investment decisions.
Protects employees’ retirement plans
Perhaps an employee accuses a plan official of miscalculating their benefits.
Easily bundled with other must-have risk management policies
When an employee is upset about investing fees relating to their retirement plan, they might file a lawsuit.
What does Fiduciary Liability Insurance cover?
Fiduciary liability insurance protects against losses to a benefit plan incurred as a result of an individual’s alleged negligent act or omission while overseeing plans.
Bad Counsel
If a plan official gives poor or ill-advised advice on investing in an employee’s retirement plan.
What Fiduciary Liability Does Not Cover
Embezzlement
This policy doesn’t cover embezzlement of a benefit plan’s fidelity bonds or other small business funds.
Crimes
Fiduciary Liability Insurance Claim Examples?
Plan Administrator Case
A plan administrator invested funds that were supposed to be put into an employees’ 401(k) into their HSA. The employee has recourse to sue the administrator and FIDLI coverage will help cover legal costs.
Computing Errors
If a fiduciary makes errors in computing or administering plans, such as improper enrollment or terminations, that often result in lost benefits and ends up as lawsuit.
Policy Communications
If in administering health and other welfare plans, a plan administrator makes inadequate policy communications or errors in counseling or providing interpretations to employees that result in lost benefits, the case will likely go to court.
Fiduciary Liability FAQ’s?
Typically, fiduciary liability insurance is highly affordable. The reason is that these policies tend to have a favorable loss history and are often bundled together with directors & officers or general liability insurance. The retentions are usually low for the same reason. It’s common for smaller businesses to have fiduciary liability insurance with a $0 retention.
Why AlphaRoot For Your Cannabis Insurance Broker?
AlphaRoot is an insurance broker specializing in cannabis and says it has diversified experience in the industry. We care about your success, providing personalized services involving risk audits and ongoing support for you to make your business thrive.
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Industry Expertise
Our team has extensive experience in creating insurance policies tailored for the cannabis sector, ensuring that coverage meets regulatory requirements and provides protection against the industry’s distinct risks.
Commitment to Client Success:
At AlphaRoot, we are committed to your success and offer personalized services, including detailed risk audits and ongoing support. We work closely with you to identify and mitigate risks, ensuring your cannabis business thrives and remains well-protected.
