Employee Benefit Plan Fiduciary Liability Insurance for Small Businesses

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Contact List for Brokers (.pdf)
Email: aigsb@aig.com
Phone: 877-TOSERVE
(877) 867-3783

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Employee Benefit Plan Fiduciary Liability Insurance for Small Businesses

Virtually every move made by small business owners, directors, officers and other "fiduciaries" responsible for employee pension and welfare benefit plans is regulated by the Employee Retirement Income Security Act of 1974 (ERISA). Odds are greater than ever that a business owner will find themselves in court, defending allegations that they somehow breached fiduciary duties. Small businesses are especially vulnerable because a sizeable lawsuit or penalty could drive them into bankruptcy. Employee Benefit Plan Fiduciary Liability Insurance offers small business owners a simple and affordable way to protect plan assets and their personal assets. This insurance provides broad coverage for a wide range of fiduciaries and benefits plans including pension and welfare plans¹, qualified and non-qualified plans², newly created plans and more. Coverage supports small business owners' efforts to correct plan defects, thereby preventing fiduciary claims.

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Features and Benefits Back To Top

Insures certain expenses associated with the Department of Labor's Voluntary Fiduciary Correction Program
Covers certain fees and penalties imposed by the IRS or Department of Labor under voluntary compliance programs

Extends to delinquent 5500 filer and other penalties as well as UK fines
Access to the nation's premier ERISA litigation attorneys to defend claims that arise

Marketing Materials Back To Top

Employee Benefit Plan Fiduciary Liability Insurance Highlight Sheet (.pdf)
An overview of the small business AIG Fiduciary Liability insurance policy.

Fiduciary Liability: It's Not Just a Big-Company Concern (.pdf) - posted with permission from the November 2002 issue of Rough Notes Magazine
Published article written by an AIG executive on Fiduciary exposure affecting all companies and not just large corporations.

Claims Back To Top

When a claim occurs, our goal mirrors that of our customer: To resolve it as quickly and fairly as possible. To achieve this goal, AIG Small Business draws on the AIG Companies' vast claims handling resources, including experienced claims specialists and the nation's premier defense attorneys, who have expertise managing even the most complex, sensitive claims and litigation.

To report an AIG Bank Card Protector^SM claim, download our claim reporting form and submit it via one of the following methods:

Mail: c-Claim for Financial Lines
         AIG Domestic Claims, Inc.
         175 Water Street, 9th Floor
         New York, NY 10038

Fax: 866-227-1750
Email: c-claim@aig.com
For Financial Lines Claims Inquiries, email c-claim@aig.com

Claim Scenarios:

Courts Say Don't Wait …
In the case of Barker v. American Mobil Power Corporation, the court held an individual personally liable for losses to a benefit plan while stating that, "While we are not unsympathetic to his burden, we note that fiduciaries may be insured for this type of liability. It would appear that prudent fiduciaries would have their plan or employers secure such insurance."

Repaying 401(k) Losses
An advertising agency owner was ordered by the court to repay more than $120,000 to two 401(k) plans for which he was the trustee. He has also been sued for several thousand dollars more. Among the allegations against him: making improper loans from the plans, failing to collateralize participant loans, failing to secure fidelity bonds for the plans, filing inaccurate 5500s, and failing to value plan assets at fair market value.

Small Plan Creates Large Scale Liability
Two consultants must restore $287,000 to their practice's money purchase pension plan following a suit by the Department of Labor (DOL). The suit alleged that the consultants, who were also the plan's trustees, failed to diversify plan assets, resulting in significant losses to the plan.

Class Action Suit Alleging Breaches Of Fiduciary Duty
A class action suit was filed on behalf of participants in a defined pension benefit plan alleging breaches of fiduciary duty arising out of the conversion of that plan to a cash balance plan. Plaintiffs claimed that inappropriate mortality assumptions and discount rates were used in calculating the lump-sum cash-out values, and that the conversion impermissibly eliminated retirement-type subsidies to save the sponsor money by maximizing the surplus assets in the converted plan. Plaintiffs alleged that the insured's failure to "grandfather" employees with longer service resulted in a decrease in accrued benefits in violation of ERISA, and sued for millions of dollars in damages.