Breach of fiduciary duty
Allegations that an insured violated the ERISA duties of prudence and loyalty in managing the plan or its assets — the core of the coverage.
Fiduciary liability insurance shields plan sponsors, trustees, committees and individual fiduciaries against personal liability for alleged breaches of ERISA duty, imprudent investment or fee decisions, and errors in administering employee benefit plans. Underwritten directly by Surety One.
Fiduciary liability insurance pays the legal defense, settlements and judgments when someone who manages an employee benefit plan is accused of breaching their duty or mismanaging the plan. It protects the people behind the plan — personally — not just the company.
If your organization offers a retirement, health or other welfare plan, the people who select its investments, set its fees, choose its vendors or run its day-to-day administration are fiduciaries under ERISA. That status is functional, not titular: you can be a fiduciary without ever being called one. And ERISA holds fiduciaries personally liable — their own assets can be exposed — for losses a plan suffers because of their decisions.
When a participant, a class of participants, or a regulator alleges that a fiduciary acted imprudently — picking expensive funds, failing to monitor a recordkeeper, letting fees creep, botching an enrollment — the resulting claim lands somewhere no other policy reaches. General liability does not respond. A homeowner's or personal umbrella policy does not respond. Most directors-and-officers policies carry an explicit ERISA exclusion. Fiduciary liability insurance is the coverage built for exactly this gap.
It is not the same thing as the ERISA fidelity bond your plan is already required to carry — a distinction worth getting right, and one we lay out in detail below.
That's the separate, federally required instrument that protects the plan from fraud or dishonesty. Our sister platform issues DOL-compliant ERISA fidelity bonds — often the same business day.
Modern fiduciary liability policies reach well beyond classic investment disputes.
Allegations that an insured violated the ERISA duties of prudence and loyalty in managing the plan or its assets — the core of the coverage.
Claims of poor or negligent investment selection, inadequate diversification, or retaining underperforming options too long.
The fastest-growing class-action theory: that participants paid unreasonable recordkeeping or investment fees relative to available alternatives.
Allegations that fiduciaries did not adequately vet or supervise the plan's service providers, advisors or co-fiduciaries.
Mistakes in enrollment, termination, benefit calculation, counseling or plan communications that cause a participant to lose benefits.
Enhanced policies respond to the cost of defending Department of Labor or IRS inquiries, and certain voluntary correction-program filings.
They sound similar and are routinely mixed up. They protect different parties, against different risks, under different rules. Most plans need both.
| Fiduciary Liability Insurance | ERISA Fidelity Bond | |
|---|---|---|
| Who it protects | The fiduciaries — sponsor, trustees, committee members, individuals — and their personal assets. | The plan itself, and ultimately its participants. |
| What it covers | Breach of fiduciary duty, imprudent or negligent decisions, administrative errors, mismanagement. | Loss of plan assets caused by fraud or dishonesty (theft, embezzlement) by those who handle funds. |
| Required by law? | Voluntary Not mandated by ERISA — but the only thing that answers a breach claim. | Required Mandated by ERISA for those who handle plan funds. |
| Typical amount | Sized to plan assets and risk — commonly $1M and up per policy period. | Generally 10% of plan assets, capped at $500,000 ($1,000,000 if employer securities are held). |
| Does it satisfy the other's job? | No — it does not meet the ERISA bonding requirement. | No — it does not cover breach-of-duty claims. |
A fidelity bond is a surety instrument that protects the plan from dishonesty. Fiduciary liability insurance is a management-liability policy that protects the decision-makers from being sued. Carrying one does not relieve you of the other.
Fiduciary status follows function. If you touch how the plan is run or invested, you may carry personal liability.
The employer that establishes and maintains the plan, and bears responsibility for its prudent operation.
Frequently named trustees or de facto fiduciaries, with personal assets directly exposed.
Members who select funds, set fees and oversee vendors are fiduciaries for those decisions.
Those holding or directing plan assets carry among the highest fiduciary exposure.
Staff who handle enrollment, communications and day-to-day administration can be fiduciaries by conduct.
Joint boards of trustees overseeing health, pension or Taft-Hartley funds face concentrated exposure.
Fiduciary liability insurance answers negligence and error. It is not a license for intentional wrongdoing.
Fiduciary liability is a management-liability form. A few structural features shape how it responds — and how much.
The policy responds to claims first made — or deemed made — against an insured during the policy period or any applicable extended reporting period. Continuity of coverage matters.
Amounts incurred as defense expenses reduce the limit of liability available to pay loss. Choosing an adequate limit means accounting for defense as well as settlement.
Defense expenses are applied against the retention. The retention is the insured's first-dollar responsibility before the policy responds.
You elect the structure: duty-to-defend, where the company controls and conducts the defense, or reimbursement, where the insured defends and is reimbursed for covered cost.
The single biggest driver of fiduciary claims today is excessive-fee litigation. Specialized plaintiff firms mine publicly filed plan disclosures — the Form 5500 and fee data every plan reports — and build class actions alleging that participants paid more than they should have in recordkeeping or investment fees. Because the inputs are public, a plan does not have to do anything dramatic to draw a suit; size and visibility are enough.
These cases are expensive to defend even when the fiduciaries ultimately prevail, and they reach individuals as well as the company. Compounding the exposure, courts have grown skeptical of indemnification arrangements, and some jurisdictions limit or bar a company from indemnifying its fiduciaries outright — which means the policy, not the employer's balance sheet, may be the only thing standing between a fiduciary and personal loss.
Strong plan governance — documented committee meetings, periodic fee benchmarking, a clear investment policy, fiduciary training — both reduces the odds of a claim and improves the terms underwriters can offer. We underwrite to those signals.
Coverage is generally affordable relative to the exposure it answers. Pricing is built from the plan, not a flat rate.
Typical range for a $1M stand-alone policy for many small and mid-sized employers with straightforward plans.
Defined contribution plans with substantial assets, complex structures or prior claims are priced — and scrutinized — accordingly.
Figures are general market ranges for orientation only, not a quote. Your premium is determined by the underwriting file. Surety One is not a tax or legal advisor; coverage questions specific to your plan should be reviewed with qualified counsel.
Both paths reach the same senior Surety One underwriters. Choose whichever fits how you work.
A guided, step-by-step version of our full fiduciary liability questionnaire. Complete it in your browser and submit it straight to underwriting — no printing, no scanning.
Prefer to print, complete by hand or fill on-screen, and sign? Download the official Surety One Fiduciary Liability Coverage Application and return it by email, fax or mail.
It protects the people and entities responsible for an employee benefit plan — sponsors, trustees, committees and individual fiduciaries — against claims that they breached their ERISA duties or mismanaged the plan. It pays defense costs, settlements and judgments arising from allegations such as imprudent investment selection, excessive fees, failure to monitor providers, or administrative errors that cost participants benefits.
No. The ERISA fidelity bond is required by law and protects the plan against fraud or dishonesty by those who handle its funds. Fiduciary liability insurance is voluntary and protects the fiduciaries personally against breach-of-duty claims. The bond does not cover breach claims, and the insurance does not satisfy the bonding requirement — most plans carry both.
No federal statute requires it. But ERISA makes fiduciaries personally liable, and no other policy — not general liability, not most D&O forms, not a personal umbrella — answers a breach-of-fiduciary-duty claim. That gap is why most plan sponsors treat the coverage as essential.
Anyone who exercises discretionary authority or control over the management or administration of a plan, or over its assets — regardless of title. That commonly includes owners, officers, investment and benefits committee members, named trustees, and HR staff who administer the plan. Because the test is functional, people are often fiduciaries without realizing it.
For many small and mid-sized employers, a $1M stand-alone policy commonly runs roughly $750 to $2,500 per year. Larger or more heavily scrutinized plans can be materially higher. Pricing is driven by plan assets, participant count, plan types, claims history and the strength of plan governance.
Coverage is built for negligence, not intentional wrongdoing. Typical exclusions include fraud and criminal acts, theft or embezzlement of plan assets, employment-related claims such as discrimination (covered under EPLI), benefits that should simply have been funded, bodily injury, and matters the applicant already knew could give rise to a claim before the policy began.
It is written on a claims-made basis, responding to claims first made during the policy period or any extended reporting period. Defense expenses reduce the available limit of liability and are applied against the retention. You elect either duty-to-defend coverage, where the company controls the defense, or reimbursement coverage, where the insured defends and is reimbursed for covered cost.
Two ways. Complete our guided online application in your browser and it routes straight to underwriting, or download the paper application, sign it, and return it by email, fax or mail. Either way a senior Surety One underwriter opens your file the same business day. Signing an application does not bind coverage.
Start the online application, or send the paper form to underwriting. A senior Surety One underwriter will respond today.
Online Application · A Surety One, Inc. Platform
Tell us about the organization applying for coverage.
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Figures as of fiscal year end. Indicate negative figures with parentheses or a minus sign.
List each plan for which coverage is requested. Add as many as you need.
Compliance and governance. Anything answered "Yes" can be explained on submission.
The terms you're seeking, current insurance, and any prior matters.
Signatory details and the declarations required to submit your application.