What is Employee Benefits Liability?
Understanding Employee Benefits Liability with a Business Risk Advisor.
By Brock Nettleton
One topic that often arises during discussions about insurance coverage with our clients is employee benefits liability.
Employee benefits liability is a specialized coverage designed to safeguard businesses from errors and omissions that may occur while administering employee benefit plans. These errors can range from failing to enroll, maintain, or terminate employees to incorrectly describing benefit plans and eligibility rules to staff members.
This coverage is pertinent across various employee benefit plans, including health insurance, voluntary benefits, life insurance, profit-sharing plans, and workers' compensation. Let's illustrate its importance with an example:
Imagine you've recently hired a new employee, and your HR director is responsible for enrolling them in the company-sponsored health plan. However, due to clerical omission, the new employee isn't enrolled, and this error goes unnoticed. Months later, the employee falls seriously ill and is hospitalized, only to discover they have no health insurance coverage. Facing hefty medical bills, this employee decides to take legal action against your company, seeking reimbursement for all related expenses.
Without employee benefits liability coverage, your company would bear the financial burden of these costs, as standard general liability policies typically do not cover such incidents.
Understanding the implications of employee benefits liability underscores its importance for businesses. It's a crucial component of risk management that should not be overlooked. If you'd like to explore how this coverage can protect your business or discuss your risk management needs further, please don't hesitate to reach out to us.
Remember, proactive risk management is key to safeguarding your business's financial health and reputation. Let us help you navigate the complexities of insurance coverage to ensure comprehensive protection for your organization.