Employee Benefits Liability Insurance, Anyone?


Because you offer your employees insurance-related benefits, failure to administer these programs properly can leave you vulnerable to litigation. Let’s say a new employee signs up for the company health plan, but isn’t enrolled due to a clerical error by the HR department. A month later, after the employee suffers a serious illness and learns that she has no health insurance, she sues your business and the HR worker to reimburse her for her medical bills.

Employee Benefits Liability (EBL) insurance to the rescue! This coverage will protect you and your workers you against legal liability for acts, errors, or omission in the administration of such employee benefits as Life, Accident, Dental, and Medical insurance; pension, profit sharing, stock ownership and savings, and other plans; Social Security, Workers Compensation, Disability, and unemployment benefits; and tuition assistance, maternity leave etc.

EBL coverage, often written as an endorsement to your General Liability policy, usually excludes claims resulting from poor financial advice or predictions of performance (for example, if a benefits worker tells an employee that the company’s 401(k) will generate a 100% annual return and the employee sues the worker because the prediction didn’t pan out).

Types of acts covered include: 1) describing benefit plans and eligibility rules to employees, other eligible family members, and beneficiaries; 2) maintaining files and records (whether electronic or paper) related to employee benefits; and 3) enrolling, maintaining , and terminating employees, eligible family members, or beneficiaries in plans.

The need for EBL varies depending on your employee head count and the number of benefits provided. We’d be happy to advise you on whether this coverage makes sense for your business – and, if it does – tailor a policy for you.