Owning a business is both challenging and rewarding. It can also result in unexpected costs, many of which relate to the benefits offered to employees. Offering various benefits beyond a salary or hourly wage can help make your business more desirable for potential employees and can help to retain skilled workers.
At times, clerical errors and miscommunication can cause employees not to receive their expected benefits. In these situations, Employee Benefits Liability Insurance can help cover the cost of claims made against you or your business.
This type of insurance is specifically designed to cover businesses and their benefits employees. Employee Benefits Liability Insurance is often offered as an endorsement to a Commercial General Liability Insurance policy.
Read on to understand if this type of insurance is right for your business.
This type of insurance is designed to help insure against lawsuits related to the management of employee benefits. Most insurance plans of this type will specify that the insurance policy covers any grievances filed by employees that are directly related to the management of an employee benefits plan. When defining “management”, these policies refer to each of the following:
This policy is strictly defined to specify only employee benefits. It is often confused with other kinds of policies, including Fiduciary Responsibility Insurance. Unlike other insurance policies, Employee Benefits Liability Insurance only insures a business and its benefits employees in cases of negligence, error or omission in the management of a benefits plan. It does not insure for the expected return of an investment vehicle.
This policy is a claims-made policy. This means that it covers claims made during the coverage period. This is not to be confused with occurrence policies, which can cover claims that are made outside of the period of coverage. Many Employee Benefits Liability Insurance policies also have a retroactive date applied.
This type of insurance policy will cover all areas of employee benefits including health insurance, retirement plans, pensions, worker’s compensation, certain tax withholdings and any paid holidays or leave that your company may offer. Some benefits are required by law. Others are not. Regardless, this insurance policy covers claims made in the management of any benefits that a business has contractually agreed to give and manage.
Getting into details...
Coverage for claims made about an employee’s enrollment in different benefits plans. Example: Covers lawsuits such as those by employees who believe that a delayed enrollment resulted in out-of-pocket costs that should have been covered by a benefits plan.
Coverage for issues related to the issuance of worker’s compensation payments. Example: Covers cases where employees on worker’s compensation believe the amount owed to them was not given.
Coverage for claims made relating to health insurance benefits and health insurance coverage. Example: Covers both the legal costs and some potential payouts in cases where an employee did not receive the proper amount of coverage for health insurance, or when the insurance was not given when it should have been.
Coverage for issues that can arise as a failure on the part of benefits employees to properly outline coverage. Example: Can insure against claims made against a benefits employee who accidentally omits certain benefits that should have been given to an employee
This insurance may come in handy if:
This insurance policy is strictly limited to covering both legally required and optional employee benefits. Health insurance, for example, is often not legally required. Many businesses offer subsidized health insurance plans as a benefit of employment in order to attract and retain higher quality employees. A common misconception is that employers must offer benefits to full-time employees or after they have reached a certain size. However, the Affordable Care Act only specifies the employers with over 50 full-time employees provide health insurance, or pay a penalty. Health insurance is still one of the most common benefits businesses offer that results in claims against an employer.
Health insurance, among all other benefits, is a common target for benefits claims. While this insurance policy will cover some of the costs incurred in the situation of a mismanaged benefit, it may not cover all of the costs. Liability limitations may apply on a per-employee basis as well as a liability limitation amount for all employees as a whole. A deductible of at least $1,000 is common.
Employee Benefits Liability Insurance also has a retroactive date applied. This date may be the exact date that this endorsement is added. It may also be a date after the policy is enacted. However, any claims made before the retroactive date will not be honored by the insurer. As a claims-made policy, this type of insurance will not cover any claims made after the policy has ended. Furthermore, this policy is strictly limited to monetary-based benefits, and will not cover many uncommon types of benefits. This includes the quality-of-life benefits increasingly offered by many technology start-ups, such as free coffee and food, on-site yoga or on-site massages.
This policy insures against claims made by current or former employees who believe that any form of benefit outlined in their contract was not properly managed on their behalf. This could mean anything from a current employee whose health insurance enrollment was accidentally delayed or deleted, to a former employee who believes the pension plan is not accurately reflecting his or her proper years of service. These insurance plans will typically have a certain deductible, and will cover a specified amount incurred by current and former employees.
All legally required benefits All optional benefits All employees receiving benefits Individual benefits employees within the business
Costs for these policies vary. How many employees that are covered by the policy will affect its total cost. At least a $1,000 deductible can be expected for all claims that are made. This type of insurance is known to be one of the most affordable types of insurance policies that a business can purchase.
An easy way to know what an employee benefit plan is is to consider it a benefit to your employees that is anything other than their salary. This includes health insurance, dental. Vision, paid time off, retirement plans, etc.
What is typically excluded from an employer’s liability insurance? Employers’ Liability usually excludes anything relating to Employment Practices which includes hiring, firing, benefit plan issues, harassment, and discrimination just to name a few.
No, Workers Compensation provides lost wages and medical expenses for employees if they become hurt or ill while performing their duties for your business. Employer’s Liability will cover your business for lawsuits where your employees claim that they became hurt or ill because you were negligent as an employer, which caused the incident.
The directors and officers of a privately-held company are at risk from suits by a variety of different people, such as customers, competitors, suppliers and government agencies. However, the greatest number of lawsuits against directors and officers come from the employees of a company itself. D&O Insurance covers your management team, should things go south.
EPLI is a liability insurance that covers wrongful acts, such as wrongful termination, discrimination, sexual harassment and retaliation. This insurance may also protect your business from other employee-related claims, such as deprivation of a career opportunity, defamation, invasion of privacy, failure to promote, and negligent evaluation.
This insurance protects goods in transit on land, as well as the property of others that is on your premises or being transported from your premises. An Inland Marine policy is crucial if your business ships goods of any kind on land.
This insurance covers a business should they need to recall one of their products. Product Recall Insurance will cover the cost of getting a defective product back under the control of the manufacturer or merchandiser that would be held responsible for bodily injury or property damage due to the existence of the product.
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