Fiduciary liability insurance defends plan sponsors, trustees, and benefits committees against ERISA fiduciary breach claims tied to managing employee benefit plans — 401(k) retirement plans, health and welfare programs, equity vesting schedules, and ESPPs.
Last reviewed April 24, 2026 · Reviewed by the Corgi Insurance team
Launching a 401(k) or self-funding a health plan turns founders, finance leads, and HR managers into ERISA fiduciaries — exposed personally to participant class actions and DOL enforcement. Fiduciary liability is the policy that defends them when a benefits decision is challenged years later.
Pulled from the actual form
Fiduciary Liability
What this policy pays for.
An ex-employee alleges the 401(k) had imprudent investment options and excessive recordkeeping fees.1
Defense costs and indemnity for ERISA Section 404 prudence and loyalty claims alleging the plan sponsor selected or retained imprudent investment options, share classes, or paid unreasonable recordkeeping, advisory, or revenue-share fees.
The DOL opens an investigation into how you supervised your third-party 401(k) recordkeeper.2
Pre-claim inquiry costs and formal investigation defense by the Department of Labor, IRS, or HHS for alleged failures to monitor and oversee third-party plan administrators, recordkeepers, and investment advisers.
A contractor sues claiming they were misclassified and wrongly denied 401(k) and health-plan participation.
Coverage for claims alleging wrongful denial of plan benefits, misapplication of eligibility rules, or improper exclusion from a 401(k), health, or welfare plan — including misclassification-driven exclusions of contractors and part-time workers.
A class of employees alleges the company stock held in the plan was an imprudent investment.3
Coverage for ERISA stock-drop claims alleging fiduciaries continued to offer or hold employer securities (including private-company stock funds and ESOP holdings) when they knew or should have known the stock was imprudent.
A former employee sues alleging your group health plan mishandled their PHI and denied a claim improperly.
Defense for claims tied to administration of group health, dental, vision, life, and disability plans — including HIPAA privacy and security violations, wrongful claim denials, and failure-to-disclose plan documents.
Plan participants allege the ESPP and equity-vesting plan were administered in violation of the plan documents.
Coverage for fiduciary claims tied to administration of qualified and non-qualified equity plans, ESPPs, and vesting schedules — including allegations of improper grant administration, accelerated vesting decisions, and conflicts of interest.
Fiduciary liability insurance covers fiduciary functions only. Settlor functions — the design and amendment of the plan itself — are excluded under most policy forms, though defense costs for allegations that blur the two are typically advanced.
Pre-claim inquiry costs are sublimited and apply to fiduciaries in their capacity as such. Personal liability of plan fiduciaries is the core trigger; plan-sponsor entity coverage is provided where the entity is named as a co-defendant.
Stock-drop coverage for private-company employer securities is subject to additional underwriting and may be sublimited or excluded entirely on plans that hold concentrated employer stock above stated thresholds.
Fiduciary, EPLI, and D&O each handle a different category of liability. Most companies that offer benefits end up with all three.
Personal protection for plan sponsors, trustees, administrators, and committee members against ERISA fiduciary breach claims. Defends decisions about investment lineups, recordkeeper selection, fee oversight, eligibility administration, and plan governance. Required once a startup launches a 401(k) or self-funds a health plan.
Defends the company and its leaders against employee claims of wrongful termination, harassment, discrimination, and retaliation. Overlaps with Fiduciary on benefits-related claims — Fiduciary covers ERISA-governed plan disputes, EPLI covers non-ERISA employment grievances. Most growth-stage startups carry both.
Defends directors and officers against claims tied to management decisions, fiduciary duty to shareholders, and securities allegations. D&O covers corporate governance; Fiduciary covers ERISA plan governance — distinct duties under distinct statutes. Both attach when an executive is named in a benefits-related class action.
Fiduciary liability becomes essential the moment a startup adopts a 401(k), establishes a self-funded health plan, or grants equity through an ESPP or non-qualified deferred compensation arrangement. ERISA fiduciary duties attach to anyone exercising discretion — not only the formal trustee — so finance leads, HR managers, and benefits committees all share personal exposure.
The policy structure (claims-made coverage with defined fiduciary capacity, breach triggers, and HIPAA / Section 502(c) sublimits) supports compliance obligations under ERISA, the Internal Revenue Code, the Affordable Care Act, and the SECURE Act 2.0. Coverage responds to DOL audits, IRS examinations, HHS Office for Civil Rights HIPAA inquiries, and participant-initiated class actions.
Fiduciary liability is designed to respond to claims arising from 401(k) fee litigation, mismanaged recordkeeper transitions, COBRA notice failures, HIPAA breaches, ESPP administration disputes, and ESOP valuations — making it the foundational benefits-governance policy for any company that offers retirement, health, or equity programs to its workforce.
401(k) class actions alleging the plan offered imprudent investment options, retained expensive share classes, or paid unreasonable recordkeeping and advisory fees in violation of ERISA prudence duties.
Claims that fiduciaries failed to supervise or replace third-party recordkeepers, TPAs, advisers, or actuaries. The duty to monitor extends to every appointed service provider over the life of the plan.
Suits alleging wrongful exclusion from 401(k) or health-plan coverage — including misclassification of contractors, denial of part-time eligibility, and failure to follow plan-document terms on enrollment.
ERISA stock-drop suits alleging fiduciaries continued to offer or hold employer securities — including private-company stock funds and ESOP holdings — when they knew or should have known the stock was imprudent.
Claims alleging HIPAA privacy or security violations, wrongful denial of medical or mental-health-parity claims, and failures in the administration of group health, dental, life, or disability plans.
Allegations that ESPPs, RSU vesting, and non-qualified deferred compensation arrangements were administered inconsistently with plan documents — including improper acceleration, conflicts of interest, and disclosure failures.
Fiduciary attaches to the benefits side of your business. Layer in CGL, Tech E&O, Cyber, EPLI, D&O, and more — modular coverage that grows with your headcount and benefits stack.
Protects your business against third-party claims for bodily injury, property damage, and personal or advertising injury arising from your operations.
Protects against losses and claims resulting from data breaches, cyberattacks, and network security failures.
Covers claims alleging your technology products or services failed to perform as intended, causing financial harm to a client.
Covers claims made against company leaders for alleged wrongful acts in managing the business.
Protects against claims alleging wrongful termination, discrimination, harassment, or other employment-related issues.
Protects your company and plan fiduciaries against claims alleging mismanagement of employee benefit plans, including retirement and health plans.
Protects against claims arising from your published or distributed content, including allegations of defamation, copyright infringement, or invasion of privacy.
Provides liability coverage when employees use rented or personal vehicles for company business.
Go deeper on fiduciary liability and the rest of the startup benefits stack.
Key terms that appear in ERISA filings, plan documents, and policy language.
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