What is Fiduciary Liability Insurance?

When

When should startups get Fiduciary Liability coverage?

FIL COVERAGE

You should consider getting fiduciary coverage if you have any of these employee benefit programs in place or plan to in the near term:

401(k)
Employee stock ownership plans (ESOP)
Welfare plans

Don’t offer benefits? You may want to. One survey found that 66 percent of workers consider a good benefits package the biggest determining factor in deciding whether or not to take a job.

In other words: to attract the best talent, you need to offer benefits. And if you do, you’ll need Fiduciary coverage. Get it here.

Why

Why should startups get Fiduciary Liability coverage?

THE LOGIC

The short answer: It protects you if you make a mistake managing benefit plans and get sued for it.

The long answer: Even if you act in your employees’ best interests, they might misinterpret your benefits advice. An employee might claim they were advised to make an investment that cost them money. Even if their claims are unsubstantiated, they can sue – and defending yourself in a lawsuit costs money.

And Vouch’s Fiduciary Liability insurance in particular is designed specifically for startups, meaning you won’t pay for more (or less) coverage than you actually need.

What

What does Fiduciary Liability insurance cover?

COMMONLY DOES COVER

A Vouch Fiduciary Liability insurance package can cover defense costs if an employee sues your startup over…

Misleading advice on investing employees retirement funds.
Poor investment decisions.
Poor or negligent investment practices, including failure to offer diversification options or charging excessive fees.
Poor communication in administering health and other welfare plans that result in lost benefits.
Mistakes in computing or administering plans (late enrollments, terminations, etc.), that result in lost benefits.

CLAIM EXAMPLE

A startup sponsors a 401(k) plan for its employees. The plan administrator is a month late on making an employee-requested transfer. Before they do, a market downturn causes the employee to suffer losses from their remaining investment. The employee sues the startup. The Fiduciary policy covers defense costs and the court-ordered settlement.

Want to learn more? Send your questions to hello@vouch.us.

COMMONLY DOESN'T COVER

While Fiduciary Liability insurance can help your company manage some risks associated with offering employee benefits, it can’t cover claims related to violations of ERISA. It also can’t cover cases of dishonest acts or fraud; those would be handled by Crime insurance.

Fiduciary Liability insurance also doesn’t cover…

Damage to your business property or losses caused by your product, which can be covered by a Business Owner’s Policy.
Claims that your professional work caused a financial loss, which are typically covered by Errors & Omissions insurance.
Employee injuries, which are covered by Workers’ Compensation.
Non-benefits-related employee lawsuits, which may be covered by Employment Practices Liability or Employee Benefits Liability insurance.
Data breach-related costs. These may be covered by Cyber insurance.

Why Vouch?

Why get Fiduciary Liability with Vouch Insurance?

VOUCH INSURANCE

As a startup founder, you have insurance needs, but you also have a lot of other things to get done.
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Vouch was created by two founders who know how complicated insurance can get, so they made it simple for other founders.

You don’t want to pay more than necessary to manage your startup’s risks, especially after building an employee benefits program – which is a sizable investment in the future of your company. Vouch helps you protect that commitment to your employees in a hassle-free way.