What Does Benefits Payable Exclusion Mean?

A standard exclusion in fiduciary liability policies precluding coverage for claims involving payment of benefits owed to a claimant, if monies are available within the plan to make such a payment. For example, assume that as a result of a lawsuit or settlement, a claimant is entitled to specific amounts of money held within an insured's pension plan. If such monies can be paid from the plan, it is not the intent of a fiduciary policy to make such payment, because this would have the effect of covering a business risk. On the other hand, if a claimant were to assert a valid claim against a now-defunct or insolvent plan (from which no, or only limited, funds were available), this exclusion would not preclude payment in such circumstances.