Glossary

Fiduciary liability

Coverage for claims that the people running an employee benefit plan breached their duties, such as imprudent investments, excess fees or administrative errors.

Also called: fiduciary liability insurance, ERISA liability insurance, benefit plan fiduciary coverage

Fiduciary liability insurance responds when plan participants, the Department of Labor or others allege that the people who run an employee benefit plan failed in their duties. Under ERISA, anyone with discretion over a 401(k), pension or health plan is a fiduciary, and section 409 makes a breaching fiduciary personally liable to restore the plan's losses. That puts individual and company assets at risk, not only the plan's.

Typical allegations are imprudent investment options, excessive recordkeeping fees, late deposits of employee contributions, failure to monitor service providers and mistakes in administering eligibility or benefits. The policy is written claims-made, pays defense costs and covered settlements or judgments, and often adds small sublimits for voluntary-correction program costs and certain regulatory penalties. Insureds usually include the plan, the sponsor, trustees, committee members and the HR staff who administer it.

Do not confuse it with the ERISA bond. The bond is required by law and protects the plan from theft by those who handle its money; fiduciary liability is optional and protects the people who get sued. A Directors and officers (D&O) insurance policy typically excludes ERISA claims, so check for a fiduciary extension or a separate policy. The guides on fiduciary liability insurance for employee benefit plans and ERISA fidelity bonds vs fiduciary liability insurance cover both.

Last reviewed October 10, 2026

In the index now

Related terms

ERISA The 1974 federal law setting fiduciary, reporting and disclosure standards for private-sector retirement and welfare benefit plans, enforced by the DOL. ERISA bond A fidelity bond ERISA requires for people who handle benefit plan funds, protecting the plan from theft or fraud and set at 10% of the funds handled. Directors and officers (D&O) insurance Liability insurance protecting a company's directors and officers, and often the company itself, against claims alleging wrongful acts in managing the business. Employee benefits liability Coverage for claims that an employer's negligent mistakes in administering employee benefit plans, such as failing to enroll someone, caused a loss. Claims-made policy A liability policy that covers claims first made against you and reported to the insurer during the policy period, whenever the underlying act occurred.

Related guides

Directors and officers (D&O) insurance explained D&O insurance protects directors, officers and the company from claims over management decisions. What it covers, what it excludes, and how the policy is built. Employee benefits liability coverage: insuring HR administration errors Employee benefits liability pays when an HR administration error leaves an employee uncovered. What it covers, excludes, and how it differs from fiduciary. Employee theft coverage and fidelity bonds: what they cover and who needs one A fidelity bond or employee theft coverage pays when staff steal. How first-party, client and ERISA bonds differ, who counts as an employee, and ERISA's rules. ERISA basics for small employers: what the law requires of your benefit plans What ERISA requires of employers with health, life and disability plans: documents, notices, fiduciary duties, bonding and 2026 penalty amounts. ERISA fidelity bonds vs fiduciary liability insurance An ERISA bond is required and covers theft by people who handle plan money. Fiduciary liability insurance is optional and covers breach claims. How each works. Fiduciary liability insurance for employee benefit plans ERISA fiduciaries are personally liable for plan losses. What fiduciary liability insurance pays for, what it excludes, and how it differs from an ERISA bond.

Related insurers

Embroker Digital insurance broker and MGA for startups, tech companies and law firms. Its own programs are written on Everest National and Everspan paper. Vouch Insurance broker for startups, tech, life sciences and financial firms. Sold its Corix MGA and Vouch Insurance Company to Hiscox under a 2025 deal.

Related industries

Financial advisor insurance What RIAs, planners and broker-dealer reps need: advisory E&O, FINRA fidelity bonds, ERISA bonds, cyber under Regulation S-P, crime for client funds and a BOP. Nonprofit insurance What nonprofits need: general liability, D&O, EPLI, crime, event and volunteer-driver cover, and what the federal Volunteer Protection Act does not do.