The short answer
Fiduciary liability and crime insurance address different risks: alleged mismanagement of benefit plans and specified theft or fraud losses. Neither a policy name nor a general summary proves a particular loss is covered. Review insured persons, exclusions, required bonds and social-engineering terms. Pricing examples below are illustrative.
Use this guide to prepare questions, not to establish coverage. Any unsourced costs, limits or timing ranges are illustrative planning examples, not quotes, verified market averages or carrier commitments.
Fiduciary liability: what it covers
Plan fiduciaries, including founders and officers who choose plan providers, can be personally liable for mistakes under federal benefits law. Fiduciary insurance covers claims such as excessive plan fees, poor investment choices, late contributions and administrative errors. Many policies also cover fees under government voluntary correction programs.
ERISA bond vs. fiduciary insurance
| ERISA fidelity bond | Fiduciary liability insurance | |
|---|---|---|
| Required by law? | Yes, for most plans | No |
| Protects | The plan, against theft by people handling its money | Fiduciaries, against claims of mismanagement |
| Amount | At least 10% of plan assets, up to $500,000 ($1M for plans holding employer stock) | Usually $1M at startup stage |
Crime insurance: what it covers
| Coverage | Example |
|---|---|
| Employee theft | An employee diverts funds to a personal account |
| Forgery or alteration | A forged check clears |
| Computer fraud | An outsider breaks in and moves money |
| Funds transfer fraud | A criminal instructs your bank to wire funds |
| Social engineering, by endorsement | An employee pays a fake invoice after a spoofed email |
Social engineering coverage usually requires call-back verification of payment changes, and carries a sublimit.
When startups add fiduciary and crime coverage
Fiduciary coverage usually comes with the first 401(k); crime when cash balances grow after a round. Both are often bought in a package with D&O, and StartupInsurance.ai can add them mid-term, priced for the remaining months. See the Series A insurance bundle and D&O coverage for startups. Terms are defined in the startup insurance glossary.
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A few more answers
Frequently asked questions
Is an ERISA bond the same as fiduciary insurance?
No. The bond, required by law, protects the plan from theft by people handling its money. Fiduciary insurance protects the people running the plan from claims of mismanagement.
Does crime insurance cover a fake vendor invoice paid after a spoofed email?
Only with social engineering coverage, usually added by endorsement with a sublimit. Standard crime and computer fraud coverage often exclude losses where your employee authorized the payment.
Do we need fiduciary insurance if a PEO runs our 401(k)?
Often, yes. Your company and its officers usually remain fiduciaries for choosing and monitoring the provider. Check whether the PEO's coverage names you; most don't.
Does crime insurance cover theft by a founder?
Usually not. Many crime policies exclude theft by owners above a set ownership share. They are built to cover theft by employees and outsiders.
What crime limit does a startup need?
Base it on your largest likely loss: cash in operating accounts and your largest regular wire. Many seed companies start at $250,000 to $1M.
General information, not a coverage determination or legal advice. Unless a specific source is identified, prices and timing ranges are illustrative planning examples—not measured market averages, quotes or guarantees. Policy wording, carrier, state and your company’s operations determine what applies.