EMPLOYEE BENEFITS LIABILITY
Why You Need Employee Benefits Liability Insurance
Employee benefits liability ( EBL ) insurance should be an integral part of your risk management strategy . EBL provides coverage to an employer for errors or omissions in the employer ’ s administration of its employee benefits program . For example , if a new employee requests to receive medical insurance through the employer and the employer failed to add the new employee to the plan , the health insurance company will later deny coverage for the employee ’ s medical claim . In this situation , the EBL coverage would pay for the benefits that would have been payable under the health insurance plan but for the employer ’ s error .
These clerical errors are common reasons for a claim :
• The employee is not added to their benefit plans
• The employee is added to the wrong benefits plan
• The employee is accidentally deleted from coverage altogether
EBL can also include coverage for inaccurate information given by employers to employees about their specific benefits . Mistakes in calculating the amounts of contributions of the employer or employee are also covered by employee benefits liability coverage . These kinds of errors are usually made by a benefits administrator in the HR Department and can include your HR manager , record keepers , accountants , and trustees .
Additionally , EBL coverage also protects employers from certain Affordable Care Act ( ACA ) and workers ’ compensation claims .
For example , this type of situation might involve a freelancer working at your firm who files a lawsuit , claiming they were wrongfully classified as an independent contractor and arguing that your company should consider them a full-time employee . Under the provisions of the ACA , this would , in effect , make them eligible for health insurance and several other employee benefit plan programs . However , EBL coverage would protect your business from a suit in such a scenario , assuming , of course , the misclassification was erroneous .
IS EMPLOYEE BENEFITS LIABILITY COVERAGE INCLUDED IN A GENERAL LIABILITY POLICY ?
Employee benefits liability coverage can either be a stand-alone policy or added as an endorsement on another policy such as commercial general liability insurance . A commercial general liability insurance policy covers third-party bodily injury , property damage , and advertising injury .
It ’ s important to note that EBL is often confused with fiduciary liability insurance . Fiduciaries are legally and ethically responsible for a client ’ s assets . Fiduciary liability is insurance coverage that protects a business from administrative errors and omissions when fiduciary duties are breached and it results in a financial loss .
WHICH POLICIES DO EMPLOYEE BENEFITS LIABILITY COVER ?
Your employee benefits liability policy covers most employee benefits including the following :
• Health insurance plan
• Dental insurance
• Vision coverage
• Life insurance
• 401 ( k )/ retirement
• Profit-sharing
• Social Security
• Unemployment
• Disability insurance
• Pension plans
• Retirement plans
A comprehensive benefits package may include the above as well as other benefits not listed here . If your employee benefits plans include something else , be sure to speak with an insurance broker to determine appropriate coverage .
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