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At their core, ESOPs give employees more than a role in the business; they give them a stake in its future. However, the same ownership structure that creates a wealth
The confidence behind employee ownership
At their core, ESOPs give employees more than a role in the business; they give them a stake in its future. However, the same ownership structure that creates a wealth of opportunity for your employees can also introduce complex fiduciary and management liability exposures that require specialized risk and insurance solutions. Choosing the right risk partner is critical. Lockton’s national ESOP insurance solutions group deeply understands the risks that come with employee ownership. We help you anticipate exposures, strengthen protection, and build insurance and risk strategies that support your business and leadership team and ultimately help enable your employee-owned business to keep progressing with confidence.
What is an ESOP?
An ESOP is a unique employee benefit plan that allows employees to become owners in the company they help build. It is often used to facilitate ownership transition while creating an opportunity for employees to share in the organization's long-term success.
What are the key insurance solutions to consider for an ESOP?
D&O insurance
Protects the company and its leadership from claims arising from management and governance decisions. For ESOP-owned businesses, D&O insurance helps address exposures related to corporate transactions, regulatory scrutiny, and other leadership decisions that can impact the organization and its employee owners.
Fiduciary liability insurance
Protects ESOP fiduciaries from claims alleging breaches of their ERISA responsibilities. Coverage can respond to allegations involving stock valuations, conflicts of interest, plan administration errors, and other fiduciary decisions made on behalf of plan participants.
Additional insurance solutions for ESOPs
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Network security and privacy liability/cyber risk
Professional liability/errors and omissions/tech E&O
Employment practices/wage and hour liability
Crime/fidelity/social engineering
Kidnap/ransom and extortion/active assailant
Reps and warranties transactional risk and tax opinion liability
Claims management
Claim performance is the true measure of any insurance program. Lockton’s Professional & Executive Risk Claims team is purposely structured to help you maximize your insurance recoveries. Lockton does not silo claims, nor do we treat claims advocacy services as a profit center. Instead, we integrate experienced insurance and claims counsel within your broking team. This ensures that claims strategy and advocacy begin at the very start of our partnership with you, so when a claim does arise, we’re fully prepared.
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Get in touchInsurance for ESOPs – FAQs
Why is fiduciary liability insurance important for an ESOP?
Fiduciary liability insurance helps protect ESOP fiduciaries against claims alleging breaches of fiduciary duty under ERISA (Employee Retirement Income Security Act). Common allegations can include improper plan administration, conflicts of interest, excessive fees, valuation disputes, and failure to act in the best interests of plan participants. Given the heightened scrutiny ESOPs often face from regulators and participants, fiduciary liability insurance is a critical component of an ESOP risk management strategy
What is the difference between D&O insurance and fiduciary liability insurance for ESOPs?
While both coverages can be important for ESOP-owned companies, they protect against different risks. D&O insurance responds to claims arising from management and governance decisions made by directors and officers, while fiduciary liability insurance addresses claims related to the administration and oversight of the ESOP and its assets. Because ESOP claims can sometimes implicate both management decisions and fiduciary responsibilities, it is important to structure these coverages together to minimize potential gaps.
What are the most common claims and investigations facing ESOPs?
ESOPs can face a range of exposures, including Department of Labor (DOL) investigations, breach of fiduciary duty claims, stock valuation disputes, mergers and acquisitions (M&A)-related claims, fraud allegations, and disputes arising from plan amendments or changes to plan design. Due to the unique ownership structure of ESOPs, these matters can result in substantial financial, regulatory, and reputational impacts if not managed effectively.
How do insurers evaluate risk for an ESOP-owned company?
When underwriting ESOP insurance programs, insurers typically review factors such as the company's governance structure, ESOP valuation processes, trustee oversight, fiduciary controls, repurchase obligations, leverage position, financial performance, and claims history. Because relatively few insurers specialize in ESOP risks, presenting a clear story around governance and risk management can be critical to securing favorable coverage terms and pricing.