SWG Specialty: How Your Clients Can Benefit from Fiduciary Bonds
September 2, 2020
Fiduciary bonds, also known as commercial surety bonds are one of the most common types of surety bonds in Canada. They serve as a legal instrument, protecting beneficiaries, heirs and creditors when a fiduciary fails to perform honestly or competently. So, what exactly is a fiduciary?
A fiduciary is someone who owes a duty of loyalty to protect the interests of another person or party. So, a fiduciary could be a trustee, an executive, director or administrator, a personal representative, a financial advisor, or any other professional or business exercising control over another person’s property and/or assets.
A court often requires a fiduciary bond for persons or parties that have fiduciary duty or responsibility to another party. In addition, beneficiaries or creditors may request fiduciary bonds because they are concerned about the loyalty or financial status of a fiduciary. (1)
Why Should Your Clients Get Fiduciary Bonds?
Fiduciary Liability Insurance protects organizations and the fiduciaries of their benefit and pension plans from any legal liability that arises from their management of those plans.
For example, if employees or retirees suffer from bad fiscal management or oversight, governmental regulators can step in and take action against the individuals or organizations who let it happen under their supervision.
In addition to pension plans and trust funds, executives have other funds under their fiduciary duty. These funds could include profit sharing plans, employee stock ownership plans, and health plans.
Many fiduciaries don’t realise the extent of their liability exposure. A common misconception among directors and officers is that their decisions about these plans and other funds are covered by the organization’s D&O policy. However, in most cases, D&O policies exclude fiduciary liability exposures.
SWG Speciality: Bonds
Commercial surety bonds are critical to the operations of many commercial companies. Industries requiring these types of bonds include but are not limited to: financial institutions, law firms, healthcare, manufacturing, public utilities, retailers, service contractors, technology, telecommunications and transportation.
For a consumer, this means that commercial surety bonds protect against fraud, misrepresentation, and compensation of monetary loss. Commercial surety bonds can be used to guarantee performance of non-construction related contractual obligations.
Fiduciary bonds comply with probate and bankruptcy in trustee needs. They are often handled by lawyers whose clients are required to file security to comply with the courts in a fiduciary capacity. These bonds guarantee compliance with the requirements of law for faithful performance of duties.
Coverage highlights:
● We have several markets for any type and class of bonds, which are Insurance Companies of Canada’s A.M. Best rating of "A++ Superior”
● We can offer Canadian bonds as well as Cross Border bonding, such as Customs and Excise bonds as well as multiple other categories
Visit our website for more information.
Content is current as of the date of broadcast and is subject to change without notice.
Source:
- https://www.fiduciarylawblog.com/2015/08/fiduciary-bonds-who-needs-them.html#:~:text=A%20fiduciary%20bond%20is%20a,duty%20or%20responsibility%20to%20another.