Fiduciary Liability Insurance Coverage Amount?
“I know from a prior Ask the Experts column about the difference between a Fidelity Bond and Fiduciary liability coverage, but I had a question regarding the amount of coverage. The prior Q&A mentioned that Fidelity Bond coverage is generally 10% of assets up to $500,000, but no corresponding required amount was listed for Fiduciary Liability coverage. Is there any required or recommended amount for coverage under a fiduciary liability insurance policy?”
Answers- Key Takeaways:
There is not a required and/or recommended fiduciary liability coverage amount under ERISA because there is not a requirement that the retirement plan sponsor purchase fiduciary liability insurance to begin with.
Most ERISA plan sponsors purchase fiduciary liability insurance due to the high costs of claims (often exceeding $1 million), along with the fact that “the liability for such claims is personal, not corporate.”
Your insurance professional who works on your policy “can, and should, benchmark your coverage against other plans with similar size/risk characteristics to your plan.” Ideally, your provider should benchmark your coverage during each policy renewal.
Answers compiled using commentary from Michael A. Webb, vice president, Cammack Retirement Group