While most businesses probably don’t view themselves as having a fiduciary duty to customers and they’re probably right, a lot of them do have that duty to their own employees, and many don’t realize it. That’s because companies that provide benefit plans that have value and need to be managed incur those duties, and the liabilities that come with them. Whether it’s profit sharing, pensions, or managed 401k plans, there’s an obligation to do right by the employees who are essentially investors in those plans, as well as fiduciary obligations to those covered by health plans. That means for companies that offer said benefits, insurance against this specific form of liability is a necessity. That’s fiduciary liability insurance for most non-financial businesses in a nutshell.
Coverage for Plan Management Professionals
Naming an external agent like an HR management firm as the party that manages your company’s benefits doesn’t outsource all the risk, but it does share it. You’ll still need to talk to an insurance professional about your needs if that is the case. For those companies who make it their business to handle benefits management for other firms, this insurance is a vital part of keeping your core operation safe in the event of a mishap or bad faith action by an employee. In fact, because of the nature of the operation, you may need coverage well beyond the limitations in most plans marketed directly to employers. Only a consultation can tell you for sure.