Should retirement plan fiduciaries carry fiduciary liability insurance?
Last updated October 2, 2026
Yes, in almost every case. Fiduciary liability insurance defends committee members and the company against ERISA breach claims — the exposure behind 401(k) fee litigation — covering defense costs, settlements, and judgments. It's voluntary, distinct from the required fidelity bond and from D&O coverage.
The fidelity bond is mandatory but protects only the plan. The people making plan decisions — committee members, officers, the company as named fiduciary — face personal exposure that only fiduciary liability insurance addresses.
What good coverage delivers:
- Defense costs from the first dollar (often the largest expense even in meritless suits)
- Settlements and judgments for alleged breaches — imprudent investments, excessive fees, disclosure failures
- Coverage for the entity, the committee, and individuals, including past members
Review limits against plan size and litigation trends, check for exclusions (voluntary compliance program fees, for one), and confirm the D&O policy's ERISA exclusion isn't your only answer. Pairing insurance with company indemnification gives committee members two independent layers.
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