Employee benefits liability insurance can provide small and midsize business owners peace of mind as they build and grow their business.
Often, when a new employee starts a job, a flurry of paperwork is initiated.
This is necessary to make sure that he or she is signed up for payroll and any corresponding benefits.
Some of those benefits may include company retirement plans, health insurance and life insurance.
Larger corporations have human resources departments to handle these responsibilities.
Small to midsize businesses usually do not have a human resources department.
Owners of such businesses usually wear many hats.
The business owners not only produce their product or service, but they’re also the director of sales and marketing, the accountant, the technician, the inventory department and the hiring manager.
When a new employee is hired, a small to midsize business owner may not get to file the necessary paperwork for some time afterward.
In the meantime, if the new employee needs to use his or her health insurance and finds out that the employer did not properly enroll him or her, he or she can sue to collect damages for the amount of his or her medical claim.
This is where employee benefits liability insurance comes in.
This coverage provides protection not only for business owners but also for anyone who administers the benefit program.
Coverage is provided for any negligent act, error or omission with regard to running an employee benefit program. This might include late enrollment of an employee, failure to enroll, improper termination of a plan or improper record keeping of that plan as far as the amount of a benefit available to an employee.
This coverage really protects businesses in three ways.
First, because the coverage provides a limit of insurance, the business owner knows he or she won’t have to pay such claims out of pocket.
Second, the policy puts a time limit on reporting claims. The claim must be made and reported within the current policy term.
If a business has a policy that runs from March 1, 2010 to March 2, 2011, all claims must happen and be reported in that window. If an employee notifies his or her employer of a claim that happened on February 15, 2010, there is no coverage.
Usually, the first year of this coverage is as far back as someone can report a claim.
Finally, whether the claim is actual or alleged, the insurance carrier has the responsibility of investigating it and defending the employer in a court of law.
Large and small businesses alike have a need for this type of insurance coverage. As soon as an employer offers an employee benefits plan, the employer should consider purchasing this coverage.
Many carriers will throw in a limit of insurance as an added value on small to midsize policies so the cost is either very minimal or included in the total price of a policy, thus making it very attractive for buyers.