Are You Ready to Comply With the DOL Fiduciary Duty Rule If It Goes Into Effect on April 10? (Part III: Your E&O Policy)

We are now two weeks from the still-current April 10 implementation date of Department of Labor’s (DOL) Fiduciary Duty Rule.

The DOL is still considering a proposed 60-day delay, but that delay might not be approved before April 10. And, while the DOL has said that, if the delay isn’t granted by April 10, it still won’t enforce the Fiduciary Duty Rule “for a reasonable time” after April 10, that won’t necessarily prevent plaintiff’s firms from suing under the Rule after April 10. (Our previous blog post discussing the DOL’s Temporary Enforcement Policy) is here.

We have previously discussed preparing your commission grids (here) and the Best Interest Contract Exemption (BICE) disclosures (here).

We now turn to your firm’s errors & omissions (E&O) policy. In the event a plaintiff’s firm decides to sue under the Fiduciary Duty Rule, you will want to have considered whether such a claim is covered.

Here are some issues to discuss with your broker, in advance of April 10:

  • Is your policy’s definition of “Professional Services” broad enough to cover claims based not only on imprudent advice, but conflict of interest and excessive fees?
  • Does your policy include a fiduciary liability exclusion? If so, you should consider if you can negotiate a carve-out of that provision – sooner rather than later.
  • Does your policy include a statutory violation exclusion and would the E&O carrier apply that exclusion to a claim brought under the DOL Fiduciary Duty Rule?
  • Does your policy include a class action exclusion, and if so, can your firm negotiate that exclusion out of the policy?
  • Finally, if your policy excludes coverage for damages based upon excessive fees, try to negotiate at least defense costs for such claims.

Remember – it is always better to ask questions about your coverage before you need it.


Susan Gelinske and Lauren Lonergan contributed to this post.


About Lauren Lonergan

Lauren Lonergan is the head of Briggs and Morgan, P.A.'s Litigation department. She has represented a broad range of businesses in state and federal courts and argued appeals before the Minnesota appellate courts, the 8th Circuit Court of Appeals and many other courts. She practices primarily in the areas of insurance coverage litigation, employment and ERISA litigation, business litigation and food industry matters.
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1 Response to Are You Ready to Comply With the DOL Fiduciary Duty Rule If It Goes Into Effect on April 10? (Part III: Your E&O Policy)

  1. Pingback: States May Be Enacting Their Own Fiduciary Duty Rules: Are You Covered Under Your E&O Policy? | Financial Markets Law

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