In legal cases that involve claims of negligence, one of the most important elements that a plaintiff must show is that the defendant breached a duty of care that he or she owed to the plaintiff. If a person or company has a fiduciary role to its clients or other individuals, they are held to the highest legal standard of care. Here are a couple examples of a fiduciary relationship and why it is so important for fiduciaries to protect themselves against potential liability.
Virtually every type of financial advisor owes his or her clients a fiduciary duty of care. A serious mistake or omission in managing someone’s funds or giving financial advance could result in serious harm and a costly liability claim.
Publicly Traded Enterprises
A company owes its shareholders a fiduciary duty of care in how it manages the company and relays information to them. Mismanagement or misrepresentations that cause a depreciation of shares’ value may result in serious fiduciary liability.
Taking on the role of fiduciary requires that a person or company be equipped to handle all of the responsibilities and risk exposure involved. Fiduciaries need adequate fiduciary liability insurance coverage so that they can effectively address claims of any actual or perceived breach of a fiduciary duty.