Understanding How Fiduciary Liability Insurance Works
Looking after someone’s finances, investments, benefits and overall welfare is a big commitment. If anything happens, you’re potentially responsible for the losses and damages the individual suffers as a result of your lack of care. Fiduciary liability insurance can help offset your liability so you can focus on serving your clients more effectively.
What the Policy Covers
Fiduciary liability insurance protects businesses and individuals serving as fiduciaries for clients, employees, or business entities from liability resulting from a violation of their fiduciary duty. This may include the following incidents:
- Negligence in investment management
- Conflicts of interest
- Improper investment allocations
- Making irresponsible financial decisions for clients
- Accidental errors in the management of funds
Without the coverage in place, the individual acting as the fiduciary and the company as a whole can be held liable for damages.
Why It Matters
If an incident happens and your clients press charges for breach of fiduciary duty, you’ll have to pay for any court costs, settlement fees, and incidental expenses out of pocket. Depending on the severity of the issue at hand, you could face hundreds of thousands of dollars in loss. With fiduciary liability coverage in place, you’ll be able to keep your company’s finances in better shape even in the event of a lawsuit.
Fiduciary liability insurance helps protect you from costly settlements and legal fees. If you’re managing clients’ finances and are in charge of their financial future, investing in coverage will protect you in the long-run.