Employee benefit liability insurance is increasingly being seen as a smart step for small-business owners.
In fact, given the rapid rate of state and federal mandates likely to impact employee benefit plans, experts consider it a prudent way to protect against inadvertent errors, omissions or other acts that could result in a lawsuit.
There are two key components to keep in mind when considering employee benefit liability coverage. They are the “administration” side and the “employee benefit program.” The administration side provides protection for the counsel and interpretation of benefits, record handling, enrollment, termination, cancellation and other administrative duties connected to the employee benefit program. The employee benefit portion pertains directly to the benefits provided to employees, including life insurance, health insurance, pension plans, stock options and other benefits.
Should an error or other unintended consequence arise that results in a loss or claim from an employee, former employee, family member or beneficiary then the policy would take appropriate steps to represent the company or pay the claim in the event of an adverse ruling.
It is essential for business owners to fully understand – and implement – a proper administrative procedure to handle employee benefit plans. It is equally important to remember that employee benefit liability insurance does not take the place of fiduciary liability coverage. Speak to your agent about how to best protect your business with employee benefit liability insurance in combination with existing coverage options.