ERISA Fidelity Bond Insurance

ERISA fidelity bond insurance is a specific type of surety bond that protects a retirement or employee benefit plan from losses resulting from fraud, theft, or other dishonest acts committed by those who handle the plan’s funds. Unlike a traditional insurance policy that protects the policyholder, an ERISA fidelity bond protects the plan itself and its participants. The bond is a guarantee that the surety company will reimburse the plan for losses caused by the dishonesty of covered individuals.

This type of bond is different from other business insurance policies, like crime or professional liability insurance, because it is specifically mandated by a federal law (ERISA) and has strict requirements regarding coverage amount and who it protects. While a crime policy might cover the company’s assets from a variety of risks, an ERISA fidelity bond is hyper-focused on protecting the assets within an employee benefit plan from a specific type of risk: dishonesty by plan fiduciaries.

For example, imagine a 401(k) plan administrator embezzles funds from the plan’s accounts. An ERISA fidelity bond would cover this loss, reimbursing the plan for the stolen amount and ensuring that the employees’ retirement savings are protected. This bond is essential because it provides a layer of protection beyond the fiduciary’s personal liability, ensuring that the plan can recover its losses even if the individual responsible cannot repay them.

While you’ll need to consult the specific policy documents to confirm your coverage, here are a few scenarios that are typically covered: