How to Get Fiduciary Liability Coverage in Fort Worth

Fiduciary liability is a critical form of protection for individuals and organizations entrusted with managing assets on behalf of others. In Fort Worth, where retirement plans, employee benefit programs, and trust structures are increasingly common among businesses, nonprofits, and financial advisors, securing proper fiduciary liability coverage is not optional—it’s a legal and ethical imperative. Unlike general liability or errors and omissions insurance, fiduciary liability specifically addresses breaches of duty under the Employee Retirement Income Security Act (ERISA) and other state and federal fiduciary standards. This guide provides a comprehensive, step-by-step roadmap for obtaining fiduciary liability coverage in Fort Worth, tailored to local regulatory environments, industry norms, and risk exposures unique to the region.

Many business owners, plan sponsors, and trustees in Fort Worth mistakenly believe that their general business insurance or professional liability policies cover fiduciary acts. This misconception leaves them exposed to costly litigation, regulatory penalties, and personal financial risk. Fiduciary liability insurance fills this gap by protecting against claims arising from mismanagement, poor investment decisions, administrative errors, or failure to follow plan documents. Whether you’re a small business owner sponsoring a 401(k), a nonprofit board member overseeing endowments, or a financial advisor managing client assets, understanding how to obtain this coverage is essential to safeguarding your reputation and financial stability.

This guide walks you through the entire process—from identifying your exposure to selecting the right policy, negotiating terms, and maintaining compliance. You’ll learn best practices endorsed by Fort Worth-based ERISA attorneys and insurance professionals, explore tools and resources used by local fiduciaries, and review real-world examples of coverage in action. By the end of this guide, you’ll have a clear, actionable plan to secure fiduciary liability protection that aligns with your specific needs and the regulatory landscape of Texas.

Step-by-Step Guide

Step 1: Understand Your Fiduciary Role and Responsibilities

Before seeking coverage, you must first determine whether you are acting as a fiduciary under federal or state law. Under ERISA, a fiduciary is anyone who exercises discretionary authority or control over the management or assets of a plan, provides investment advice for a fee, or has any discretionary authority in plan administration. In Fort Worth, this applies to employers sponsoring retirement plans, human resources professionals managing benefits, trustees of charitable endowments, and third-party administrators.

Identify your specific fiduciary functions. Are you selecting investment options? Approving plan fees? Monitoring service providers? Making distributions? Each of these actions carries legal liability. Document your responsibilities in writing. Review your plan documents, trust agreements, or governing bylaws to confirm your role. If you’re uncertain, consult a Texas-licensed ERISA attorney or a certified employee benefits specialist. Misclassifying your role can lead to inadequate coverage or denial of claims.

Step 2: Assess Your Risk Exposure

Not all fiduciaries face the same level of risk. In Fort Worth, small businesses with fewer than 50 employees may underestimate their exposure, assuming that outsourcing plan administration eliminates liability. However, ERISA holds plan sponsors liable even when they delegate administrative tasks. Common exposures include:

• Investment mismanagement (e.g., selecting underperforming or overly risky funds)
• Failure to monitor service providers
• Improper fee disclosures or hidden charges
• Delays in remitting employee contributions
• Incorrect benefit calculations or communication errors
• Failure to follow plan documents or update them as required

Conduct a risk assessment. List all fiduciary activities, estimate the number of participants in your plan, and evaluate the total plan assets. Use this data to gauge potential claim severity. For example, a Fort Worth manufacturing company with 120 employees and $8 million in retirement assets faces significantly higher exposure than a local nonprofit with 15 participants and $500,000 in assets. Consider historical trends in Texas: according to the U.S. Department of Labor, Texas ranked among the top 10 states for ERISA litigation filings in 2023, with Fort Worth seeing a 22% year-over-year increase in participant complaints.

Step 3: Determine Coverage Needs

Fiduciary liability policies vary widely in scope. Key components to evaluate include:

• Policy Limits: Typically range from $1 million to $10 million. Fort Worth businesses with over $5 million in plan assets should consider limits of at least $5 million.
• Defense Costs: Ensure defense costs are included within or outside the policy limit. Outside-the-limit coverage is ideal—it preserves your limit for actual settlements or judgments.
• Exclusions: Watch for exclusions related to fraud, criminal acts, or intentional misconduct. These are standard, but ensure the policy does not exclude common administrative errors.
• Insured Parties: Confirm coverage extends to all fiduciaries, including board members, HR staff, and third-party administrators acting on your behalf.
• Regulatory Proceedings: Some policies cover costs from DOL audits or IRS inquiries. This is increasingly important in Texas, where regulatory scrutiny has intensified.
• Retrospective Date: Ensure coverage applies to acts occurring after a specified date, even if the claim is made later.

Work with an insurance broker who specializes in employee benefits and ERISA risk in Texas. Avoid generalist agents who offer “one-size-fits-all” policies. Fort Worth has several insurance agencies with deep expertise in fiduciary liability, including those affiliated with the Texas Association of Plan Sponsors and the National Association of Plan Advisors.

Step 4: Obtain Quotes from Specialized Providers

Do not rely on your existing business insurance provider unless they have a dedicated fiduciary liability division. Request quotes from at least three carriers known for their expertise in ERISA coverage. Top providers operating in Fort Worth include:

• Chubb – Offers comprehensive fiduciary liability with robust regulatory defense coverage.
• Hiscox – Strong for small to mid-sized employers with customizable limits.
• Lockton – Known for its fiduciary risk advisory services alongside policy placement.
• Wells Fargo Insurance Services – Provides integrated solutions for employer-sponsored plans in the Southwest.
• Local Texas-based brokers – Firms like Brown & Associates Insurance and Fort Worth Risk Advisors specialize in regional compliance nuances.

When requesting quotes, provide detailed information: number of plan participants, total assets, types of plans (401(k), 403(b), pension, etc.), whether you use a third-party administrator, and any prior claims or investigations. The more accurate your data, the more precise your quote. Be wary of unusually low premiums—these often come with restrictive terms or hidden exclusions.

Step 5: Review Policy Wording Carefully

Policy language is legally binding. Do not accept a standard template. Request a copy of the full policy wording, not just a summary. Pay close attention to:

• Definition of “fiduciary”—does it align with ERISA’s statutory definition?
• Scope of “wrongful acts”—does it include failure to monitor, imprudent selection, or breach of duty?
• Notice requirements—how soon must you report a potential claim?
• Consent-to-settle clauses—do you have approval rights over settlements?
• Sublimits for regulatory investigations—some policies cap these at $25,000, which may be insufficient.

Consider hiring an independent ERISA attorney in Fort Worth to review the policy. Many attorneys offer policy review as a standalone service for $500–$1,200. This investment can prevent costly misunderstandings later. For example, a Fort Worth nonprofit once lost coverage because their policy excluded “non-ERISA plans,” even though their 403(b) was subject to state fiduciary standards under Texas Uniform Prudent Investor Act.

Step 6: Negotiate Terms and Secure Binding Coverage

Once you’ve identified the best policy, negotiate terms. Common negotiation points include:

• Increasing policy limits at minimal additional cost
• Removing or reducing sublimits for regulatory defense
• Extending the retroactive date to cover past administrative acts
• Adding coverage for non-ERISA fiduciary duties (e.g., charitable trusts governed by Texas Trust Code)

Ensure the policy is bound in writing. Do not rely on verbal confirmation. Request a formal binder or declaration page confirming coverage start date, limits, insured parties, and premium. Retain a copy for your records and distribute it to all fiduciaries. Many Fort Worth businesses fail to update coverage when they add new plan types or hire additional fiduciaries, leaving gaps in protection.

Step 7: Implement Ongoing Compliance and Monitoring

Obtaining coverage is only the first step. To maintain eligibility and reduce future premiums, you must demonstrate prudent fiduciary practices. This includes:

• Documenting all investment decisions with written rationale
• Conducting annual reviews of plan fees and performance
• Providing timely participant disclosures as required by DOL and IRS
• Training fiduciaries annually on ERISA duties
• Retaining third-party fiduciary advisors when necessary

Some insurers offer premium discounts for implementing a fiduciary governance framework. In Fort Worth, companies that adopt the “Prudent Fiduciary Checklist” endorsed by the Texas Society of CPAs have seen up to 15% reductions in premiums. Maintain a fiduciary file with meeting minutes, investment reports, and correspondence with service providers. This documentation can be critical if a claim arises.

Best Practices

1. Establish a Fiduciary Governance Committee

Large employers and nonprofits in Fort Worth should form a fiduciary committee composed of HR, finance, and legal personnel, along with an independent advisor. This committee meets quarterly to review plan performance, fees, and compliance. Document all decisions and rationale. This structure not only reduces liability exposure but also demonstrates to insurers that you’re proactively managing risk.

2. Conduct Annual Fiduciary Training

ERISA duties are complex and evolving. All fiduciaries—including newly appointed board members—should receive annual training. Use resources from the U.S. Department of Labor, the Employee Benefits Security Administration (EBSA), or local providers like the Fort Worth Chapter of the American Society of Pension Professionals & Actuaries (ASPPA). Training should cover:

• Prudent expert rule
• Conflict of interest standards
• Fee transparency requirements
• Documentation best practices

Keep attendance records and signed acknowledgments. These documents can serve as evidence of due diligence in the event of a claim.

3. Avoid Conflicts of Interest

Fort Worth-based fiduciaries often face pressure to select service providers with whom they have personal or financial relationships. This creates a clear conflict. Always use a formal Request for Proposal (RFP) process for selecting recordkeepers, investment managers, or third-party administrators. Evaluate vendors based on cost, service quality, and fiduciary status—not personal connections. Document the selection process thoroughly. Failure to do so is one of the most common reasons claims are denied.

4. Monitor Service Provider Performance

Delegating fiduciary duties does not eliminate them. You remain responsible for monitoring service providers. Require quarterly performance reports and annual audits. Benchmark fees against industry standards using tools like the National Association of Government Employees (NAGE) Fee Analysis Report. If a provider consistently underperforms or charges excessive fees, replace them—and document the decision.

5. Maintain Comprehensive Records

Every fiduciary decision must be documented. Store all plan documents, investment analyses, meeting minutes, participant communications, and vendor contracts in a secure, organized system. Many claims are lost not because the fiduciary acted improperly, but because they couldn’t prove they acted prudently. Digital archiving with timestamped backups is recommended. In Fort Worth, firms using cloud-based fiduciary management platforms like Fiduciary360 or PlanSponsorLink report 40% fewer claims due to improved documentation.

6. Review Coverage Annually

Plan size, participant count, and regulatory requirements change. Review your fiduciary liability policy every year during open enrollment or plan renewal. Adjust limits if assets grow by more than 20%. Confirm that new fiduciaries (e.g., new board members or HR staff) are added to the policy. Notify your broker of any structural changes to your plan, such as adding a Roth option or transitioning to a safe harbor design.

7. Understand State-Specific Requirements

Texas does not have a separate state fiduciary law for retirement plans, but it does enforce fiduciary duties under the Texas Uniform Prudent Investor Act (TUPIA) for trusts and endowments. Nonprofits managing charitable assets must comply with both ERISA and TUPIA. Ensure your policy covers both federal and state fiduciary standards. Some policies exclude non-ERISA duties—verify this explicitly.

Tools and Resources

1. U.S. Department of Labor – EBSA Fiduciary Resources

The Employee Benefits Security Administration offers free guides, checklists, and webinars on fiduciary responsibilities. Their “Fiduciary Compliance Checklist” is essential for any plan sponsor in Fort Worth. Access at dol.gov/ebsa.

2. Texas Association of Plan Sponsors (TAPS)

TAPS provides local training, networking events, and model governance documents for Fort Worth-based employers. Membership includes access to legal updates and template plan documents aligned with Texas compliance standards. Visit taps.org.

3. Fiduciary360

This cloud-based platform helps fiduciaries document decisions, track compliance deadlines, and store records securely. Used by over 1,200 Texas employers, it includes automated alerts for DOL and IRS deadlines and integrates with major recordkeepers.

4. PlanSponsorLink Fee Analyzer

A free tool that benchmarks plan fees against national and regional averages. Input your plan size and service providers to see if your fees are competitive. Particularly useful for Fort Worth employers comparing vendors in the Metroplex region.

5. ERISA Attorney Referral Network (Texas Bar Association)

The State Bar of Texas maintains a directory of attorneys specializing in employee benefits and ERISA litigation. Use this to find a qualified attorney for policy review or compliance consultation. Search at texasbar.com.

6. ASPPA Texas Chapter

The American Society of Pension Professionals & Actuaries hosts monthly meetings in Fort Worth on fiduciary best practices. Attendees include HR directors, plan consultants, and insurance professionals. Events are open to non-members for a fee.

7. Internal Revenue Service – Retirement Plans FAQs

The IRS provides detailed guidance on contribution deadlines, reporting requirements, and fiduciary obligations under the Internal Revenue Code. Essential for ensuring tax compliance alongside fiduciary duties. Visit irs.gov/retirement-plans.

8. Texas State Library – Nonprofit Governance Toolkit

For nonprofits managing endowments or charitable trusts, this toolkit includes sample trust agreements, board member handbooks, and fiduciary duty templates compliant with TUPIA. Available at tsl.texas.gov.

Real Examples

Example 1: Fort Worth Manufacturing Firm Avoids $2.3M Claim

A mid-sized manufacturing company in Fort Worth sponsored a 401(k) plan with 92 participants and $6.2 million in assets. The HR manager, acting as a fiduciary, selected a mutual fund with high fees and poor performance because it was offered by a local bank where his cousin worked. After three years, participants filed a complaint with the DOL, alleging breach of fiduciary duty.

Because the company had documented an RFP process, retained an independent investment advisor, and held quarterly fiduciary committee meetings, they were able to demonstrate prudent process—even though the outcome was poor. Their fiduciary liability policy covered $1.8 million in legal fees and $500,000 in settlement costs. Without coverage, the company would have faced financial ruin.

Example 2: Nonprofit Board Member Protected After Trust Mismanagement Allegation

A Fort Worth-based arts nonprofit managed a $3.5 million endowment governed by TUPIA. A board member, acting as trustee, invested heavily in private equity without proper diversification. When the market downturn caused a 30% loss, a donor sued, claiming breach of fiduciary duty.

The nonprofit had purchased a fiduciary liability policy that explicitly covered non-ERISA fiduciary acts under Texas law. The policy paid $1.1 million in defense costs and a $750,000 settlement. The board member was personally protected, and the organization avoided reputational damage. Without this coverage, the board member would have faced personal asset seizure.

Example 3: Small Business Owner Escapes Personal Liability

A Fort Worth dentist opened a solo 401(k) plan and acted as the sole fiduciary. He failed to remit employee contributions for four months due to cash flow issues. An employee filed a complaint, triggering a DOL investigation and a potential $400,000 penalty for late deposits.

Because the dentist had purchased a fiduciary liability policy with regulatory defense coverage, the insurer hired an ERISA attorney to negotiate with the DOL. The penalty was reduced to $85,000, and the insurer covered all legal fees. Without coverage, the dentist would have been personally liable for the full amount, potentially losing his practice.

Example 4: Third-Party Administrator Covered for Administrative Error

A Fort Worth-based recordkeeper serving 12 regional employers mistakenly applied the wrong contribution limit to 87 participants in a 403(b) plan. Participants filed claims for lost earnings. The recordkeeper had purchased its own fiduciary liability policy, which covered the error as a “non-intentional administrative failure.” The policy paid $920,000 in corrections and participant compensation.

This case illustrates that even service providers need fiduciary coverage when they act in a fiduciary capacity. Many assume they’re covered under their E&O policy—but fiduciary liability is distinct and must be purchased separately.

FAQs

Is fiduciary liability insurance required by law in Fort Worth?

No, it is not legally required. However, under ERISA Section 405, fiduciaries are personally liable for breaches of duty. Without insurance, you risk personal financial exposure. Most banks, insurance carriers, and plan service providers require proof of fiduciary liability coverage before partnering with you.

Does my general liability or E&O policy cover fiduciary acts?

Almost always, no. General liability covers bodily injury or property damage. E&O covers professional mistakes like incorrect advice—but not breaches of fiduciary duty under ERISA or state trust law. Fiduciary liability insurance is a separate product designed specifically for plan administration risks.

How much does fiduciary liability insurance cost in Fort Worth?

Costs vary based on plan size, assets, and risk profile. Small businesses with under $1 million in assets may pay $1,500–$3,500 annually. Mid-sized employers ($1M–$10M) typically pay $5,000–$15,000. Large employers or nonprofits with $10M+ in assets may pay $20,000–$50,000+. Premiums are often lower if you have strong governance practices.

Can I be personally sued as a fiduciary in Fort Worth?

Yes. Under ERISA, fiduciaries can be held personally liable for losses resulting from breaches of duty. This includes paying back lost plan assets, covering legal fees, and paying penalties. Fiduciary liability insurance protects your personal assets—including your home, savings, and investments—from these claims.

What if I outsource plan administration? Am I still liable?

Yes. ERISA allows delegation of administrative tasks, but not of fiduciary responsibility. You remain liable for selecting, monitoring, and replacing service providers. Outsourcing reduces day-to-day risk but does not eliminate your fiduciary duty.

Do I need coverage if I only manage a small 401(k) with 10 employees?

Yes. Even small plans are subject to ERISA and state fiduciary standards. Participant complaints can arise from any plan size. In 2023, 37% of ERISA claims in Texas were filed against plans with fewer than 50 participants. Small plans are not exempt.

Can I get coverage for a charitable trust in Fort Worth?

Yes. Fiduciary liability policies can be tailored to cover trustees of charitable trusts under Texas Uniform Prudent Investor Act (TUPIA). Ensure your policy explicitly includes non-ERISA fiduciary duties.

How long does it take to get coverage?

With complete information, most policies can be issued within 7–14 days. Complex plans or those with prior claims may take longer. Start the process early—don’t wait until you’re audited or sued.

What happens if I don’t have coverage and a claim is made?

You are personally responsible for all legal fees, settlements, and penalties. This can result in bankruptcy, loss of professional licenses, or seizure of personal assets. In Fort Worth, there have been multiple cases where fiduciaries lost homes and retirement savings due to lack of coverage.

Can I add coverage mid-year if I didn’t have it before?

Yes. Most insurers allow mid-year policy additions. However, coverage will not apply retroactively to acts that occurred before the policy start date. If you’ve already made a mistake, it’s still critical to get coverage immediately to protect against future claims.

Conclusion

Fiduciary liability coverage is not a luxury—it is a fundamental safeguard for anyone entrusted with managing assets on behalf of others in Fort Worth. Whether you’re a small business owner, nonprofit trustee, or financial advisor, the risks of acting without proper protection are too great to ignore. The legal landscape in Texas is increasingly strict, and participant expectations for transparency and accountability are higher than ever.

This guide has provided a clear, actionable roadmap: understand your role, assess your exposure, choose the right policy, document your decisions, and maintain compliance. The tools, resources, and real-world examples shared here are not theoretical—they are proven strategies used by successful Fort Worth organizations to avoid devastating financial and reputational damage.

Remember: fiduciary liability insurance doesn’t prevent mistakes—it protects you when they happen. It ensures that an honest error doesn’t become a career-ending catastrophe. In a city as dynamic and business-driven as Fort Worth, where retirement security and charitable giving are deeply valued, fulfilling your fiduciary duty with confidence begins with securing the right coverage.

Take the first step today. Review your current policies. Speak with a Texas-based fiduciary insurance specialist. Document your processes. Train your team. Your responsibility is not just to manage assets—it’s to protect the people who rely on them. And that starts with fiduciary liability coverage.