Protecting Those that Handle Employee Benefits
When dealing with employee benefits, fiduciary insurance claims can occur if an employee feels their benefits have been mishandled. Fiduciary liability insurance policies, also known as FLIPs, can be offered as stand-alone policies or as part of comprehensive risk policy.
What are Employee Benefits?
Fiduciaries oversee benefits of retirement and welfare. If any of these items are perceived to be mishandled, an employee can file suit against an employer and any fiduciaries. Welfare plan benefits include medical, dental, vision, life and disability insurance. Retirement plan benefits can involve 401ks, pension plans or employee stock options.
What is a Fiduciary?
FLIP offers protection for those who are responsible for creating, managing or administering employee benefits. This person, the fiduciary, can include anyone that handles benefits from the business owner to the payroll clerk. Any of these individuals can be named in fiduciary insurance claims in which an employee feels benefits have been mismanaged.
Mismanagement can involve many aspects, including:
Negligent selection of service providers
Mishandling of plan records
Improper asset investments
In the face of a lawsuit, FLIPs will assist in covering legal expenses for the named defendant, but it will also provide reimbursement to the employee for any losses incurred due to fiduciary error.
When handling the benefits of employees, mistakes can happen, and businesses should invest in a comprehensive FLIP so they are protected when mistakes occur.