As a fiduciary of your company, you have important responsibilities and are subject to higher standards of conduct than the average employee, since you act on behalf of another in situations that require trust, honesty, and loyalty. Fiduciaries can face a variety of different legal claims, due to an accusation of an error or negligence in administering a plan, or even giving bad advice or faulty instructions to participants.
In order to protect yourself financially from a legal claim brought against you, it’s essential to have the right Passaic County Fiduciary Liability policy. There is no fool-proof way to avoid a lawsuit; however there may be steps you can take to potentially reduce your legal risks and limit your liability. Reducing legal risks starts will following the basic standards of conduct, but what else can be done?
A fiduciary may be able to limit their liability by giving participants a certain amount of control. For example, many 401(k) and profit sharing plans may be set up in a way that give members control over the investments in their accounts. If it is set up this way, members must be given the opportunity to choose from a broad range of investment alternatives. In fact, under Labor Department regulations, there must be at least three different investment options so that employees may diversify investments within and investment category.
Another way for fiduciaries to reduce their legal risks is by initiating plans that automatically enroll employees in a savings plan. While the fiduciary would retain the responsibility for selecting and monitoring the investment alternatives that are made available under the plan, plan participants would be able to direct their investments to a broad range of options, and be provided materials on these options to help them do so, with little fiduciary involvement.
At Tri-State Insurance Agency, we understand that handling financial or medical benefits plans can be highly complex, and insuring fiduciaries reflects that. We offer comprehensive Passaic County Fiduciary Liability Coverage in addition to other vital Business Insurance Wayne New Jersey policies. Please contact us today for more information at (888) 990-0526.