Alpharoot

Fiduciary Liability

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

Improper Counsel

Suppose an employee feels that they were improperly counseling regarding investment decisions.

 

Calculation Error

Perhaps an employee accuses a plan official of miscalculating their benefits.

 

Fee Dispute

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.

Risky Investments

If a plan official makes risky investments in an employee’s retirement plan.

 

Plan Official Errors

If a plan official makes errors in administering healthcare or welfare plans, resulting in lost or incorrect benefits.

 

Improper Change

If a plan official wrongfully denies or makes improper changes to an employee’s benefits.

Service Providers

If a plan official makes an ill-considered selection of third-party service providers.

What Fiduciary Liability Does Not Cover

What Fiduciary Liability Does Not Cover

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?