An organization should insure its employees against liability incurred while on duty. This is covered under a general liability policy. However, this does not cover against liability caused by negligence related to employee benefits. This is where employee benefits liability insurance comes in. In most cases, the coverage is included as an endorsement to the general liability policy.

Many organizations provide benefits to their employees such as health insurance, life plan, retirement plans, all in an attempt to provide the best package. However, omissions and errors can arise during the administration of these benefits, in which case an employee can claim damages.

Employee benefits liability insurance insures the employer in case there are claims due to negligence in the administration of benefits. For instance, a company may erroneously fail to enroll an employee in a health plan or failure to give an employee proper advice about some benefits. In turn, the employee may claim damages from the employer. Any organization, which provides employee benefits and has many employees, should get benefits liability insurance coverage.

What is covered by the employee benefits liability insurance?

Employee benefits liability insurance covers damages claimed from the insured due to negligence in the management of staff benefits such as insurance, social security benefits, pension plans and maternity leave. Acts, omissions and errors covered include:

Providing information about a plan and its eligibility rules. For example, a benefits manager may give incorrect information to the employee about the coverage of a health plan only the employee to find out later that the information was wrong. In this case, the employee may sue the company and the employee responsible.

Enrolling employees and their beneficiaries in benefits plans. The insurance covers instances where an employee is erroneously not enrolled in a benefit plan. For instance, a recipient may not be included in a health policy or a life insurance plan. Maintenance of benefits records. The policy covers instances an employee benefits file may be misplaced or electronic file may be erased.

what is not covered by the benefits liability insurance

The employee benefits liability insurance does not provide coverage in case there are claims due to the following circumstances:

In case an employee is given poor advice on plans. For instance, if an employee is given poor performance prediction on a retirement plan, the insurance cannot pay damages if there is a claim. Other instances that are not covered by the insurance include cases of fraud, practices related to employment such as discrimination and unfair termination, lack of enough funds and other jobs that are not related to employee benefits.

 

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