Many businesses protect themselves with employer’s liability insurance but fail to get employee benefits liability coverage. EBL insurance shields businesses from errors and omissions that occur when administering employee benefit plans. For example, the employer may forget to add a new employee to the medical insurance or employee stock plan.
EBL coverage typically covers the following benefit plans:
- Health insurance
- Life insurance
- Disability insurance
A business’s benefits package may include different plans that could require additional coverage.
Most employee benefits liability policies have two different limit types:
- Aggregate: The highest amount the insurer will pay per policy.
- Each Employee: The highest amount the insurer will pay per employee. This limit type usually includes the employee’s family members and beneficiaries.
Fiduciary Liability Insurance
Employee benefits liability insurance is often confused with fiduciary liability coverage. Fiduciaries are people or organizations that act on behalf of and maintain the best interests of clients. Fiduciary liability insurance is designed to protect a business when a fiduciary does not act in good faith and causes the company a financial loss.
Not every business will need employee benefits liability coverage. An organization that offers little to no benefits may not require EBL coverage, but business owners should turn to insurance brokers for guidance on this matter.