It is dangerous to assume that the liability coverage included in a business insurance policy provides catch-all protection against most claims. General liability plans — as well as errors and omissions endorsements — only protect a business against certain claims by third parties, typically customers or clients.
A Dangerous Gap in Coverage
No coverage is included for claims by employees and/or their family members of benefits mismanagement by company administrators, but the potential risk of lawsuits is just as great. Such a gap in coverage makes the addition of employee benefits liability insurance a vital piece for any business large enough to administer employee benefits plans. Potential scenarios that are covered include:
An administrator mistakenly deletes or misplaces an important employee file.
A company official incorrectly advises an employee that a non-immediate family member is eligible for coverage on a health insurance plan.
A new hire signs on for health insurance and eight months later is injured seriously in a non-work-related accident, only to discover that due to an administrative error, he was never enrolled in the health plan.
Filling the Void
Employee benefits liability insurance covers errors and/or omissions in the administration of various benefits plans, including insurance, pensions, disability, workers comp or tuition programs. Coverage includes legal defense and the payment of any judgments or settlements, up to the policy limits. Criminal or fraudulent acts are not covered.
Mistakes happen. Don’t assume your company is covered, consider an employee benefits liability insurance plan.