What is Fiduciary Liability?
Fiduciary liability may refer to the legal responsibility of a person or organization to act in the best interests of another person or organization. A fiduciary is a person or organization entrusted to manage the assets of another, such as a trustee, investment adviser, executor, or guardian. In this relationship, the fiduciary is legally responsible to act in the best interests of the other party.
Fiduciary Liability in More Detail
This duty of loyalty requires the fiduciary to act with the utmost good faith, and with the care, diligence, and skill of a reasonably prudent person. A breach of fiduciary duty may result in legal liability for the fiduciary. Fiduciary liability insurance is a type of insurance that protects a fiduciary from losses resulting from a breach of fiduciary duty.
Fiduciary liability insurance is designed to protect the fiduciary from personal liability for losses resulting from the failure to properly manage the assets of the other party. It may also cover legal costs associated with defending a claim for a breach of fiduciary duty. Fiduciary liability insurance may also cover the fiduciary for losses resulting from errors and omissions in the performance of their duties.
Fiduciary liability insurance is an important protection for those who have a fiduciary relationship with another party. It is important to understand the scope of coverage and the limits of the policy. Fiduciary liability insurance is not intended to replace the fiduciary’s duty of loyalty, but it can provide a layer of protection in the event of a breach of that duty.
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