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Settlor Coverage

Settlor Coverage

Definition

Settlor Coverage — a type of coverage afforded by some fiduciary liability insurance policies, although only by endorsement, rather than within the terms of standard policy forms.

A settlor is a person who, in administering employee benefit programs, acts with broad discretionary authority. In contrast, a fiduciary must act strictly in accordance with the provisions of the Employee Retirement Income Security Act (ERISA).

Recognizing that settlor and fiduciary acts, while legally different, are nevertheless both closely related and functionally similar, a handful of insurers has responded to the fact that fiduciary liability policies do not cover the acts of settlors by offering endorsements to their policy forms that affirmatively cover settlor acts.

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