What it is
Fiduciary liability covers claims against the company and the individuals who administer employee benefit plans, above all the 401(k): imprudent investment menus, excessive fees, and administrative errors. It is normally bundled with D&O and EPLI.
What it covers
- ERISA claims over 401(k) investment options and fees
- Administrative errors in benefits plans
- Defence costs for plan fiduciaries, who are personally liable under ERISA
- Settlor and fiduciary defence at most carriers
What it does not cover
- The benefits themselves (the policy covers claims, not plan funding)
- Deliberate self dealing once adjudicated
- Pension underfunding
What triggers buying it
- Offering a 401(k) or other retirement plan
- A founder or head of people becoming a named plan fiduciary, often without realising it
- Growing headcount and plan assets
Who requires it
ERISA makes plan fiduciaries personally liable; the requirement is the law, and the cover is normally inexpensive inside the management liability package.
Typical limits
Commonly $1M, bundled with D&O and EPLI.
Frequently asked questions
Who is a fiduciary at a startup?
Usually the company, the plan administrator, and anyone with discretion over the plan, which in practice includes founders and finance leads. Most are surprised to learn the liability is personal.
Talk through your stack before you sign the next contract
Send us the term sheet, the customer MSA, or the renewal you are worried about. We will tell you plainly what it requires, what your current programme does about it, and what we would place differently.