What does fiduciary liability insurance cover?

Fiduciary liability insurance specifically covers claims that arise from breaches of fiduciary duties in managing employee benefit plans, such as pension plans or health insurance plans. This type of insurance is designed to protect fiduciaries—such as plan sponsors, trustees, and administrators—against claims resulting from alleged mismanagement of these benefit plans.

Fiduciaries have a legal obligation to act in the best interests of the plan participants and beneficiaries. If they fail to uphold their duties—such as failing to diversify plan investments, making imprudent decisions, or providing inaccurate information—they can be held liable. The insurance helps cover the cost of legal defense, settlements, and any judgments or penalties that may arise from such claims.

The other options do not pertain to the specific responsibilities associated with fiduciary liability. Claims related to property damage, personal injury, or employee misconduct are covered under different types of liability insurance and do not reflect the unique aspects of fiduciary duty related to employee benefits.