FAQs on Employee Benefits Liability Coverage

A good benefits package can enhance your business by attracting employees and retaining current staff. But there’s a downside: errors in the administration of benefits can result in lawsuits against your company. If this happens, your employee benefits liability (EBL) policy will kick in. How? Here are some FAQs on this important coverage.

What is employee benefits liability coverage? Employee benefits liability insurance protects your company against suits that result from administrative errors. If someone managing your employee benefits makes a mistake and this error results in a lawsuit, EBL protects you from the associated costs. These types of suits are not covered by general liability policies, making this additional coverage a very important add-on; EBL coverage is typically added to your general liability policy as an endorsement.

What kinds of mistakes? Employee benefits packages can be extremely complex. From life insurance policies to maternity leave, these benefits involve minute details and significant administration. When an error is made, affected employees can suffer major financial losses. EBL is available to cover these situations, including:

  • Descriptions of benefits and eligibility. When explaining coverage to your employees, you or your benefits manager may convey incorrect information, and the employees are more than likely to make benefits choices based on this erroneous info. This decision could cost them down the road, and they may hold you liable for their financial burden. If a lawsuit is filed because of your error, EBL has you covered.
  • Losses of electronic and/or paper records. Maintaining records of all benefit information is essential. If your HR department accidentally loses a benefit file, the loss could prove costly. If your employee suffers because this information is missing and sues you, your EBL insurance covers the costs.
  • Enrollment, maintenance, and termination of employees and beneficiaries. If your benefit packages are complex, it can be easy to miss a detail. One mistake on a form could omit an employee’s beneficiary from that person’s plan. Mistakes such as these are covered by EBL insurance.

What plans are covered? EBL offers coverage for a full range of benefits. These include insurance benefits, financial benefits, disability and worker’s compensation benefits, and other fringe benefits such as tuition reimbursement and maternity leave.

Who needs EBL insurance? If your staff includes a large number of employees and you offer a full benefits package, it’s wise to have this policy in place. If you have few workers and offer few benefits, you may not need it, although it’s always wise to check.

As the goal is to provide coverage against large claims by employees or their dependents should they suffer financial loss due to your mismanagement of their benefits, the size of your risk will determine the coverage required. When in doubt, discuss EBL coverage with your agent, who will help you review your insurance policies and decide whether EBL coverage is necessary for your business.

Mistakes happen. If they do, EBL can provide you with peace of mind. And it may prevent the unthinkable: a suit that will sink your company.

Is Separate Coverage Required for Suits vs. Claims?

You’ve heard of employees filing a suit against their company. You’ve also heard of people making a claim against their employer to demand financial compensation. So what’s the difference? Are these the same? Do you need separate insurance policies to cover claims and suits?

Suit definition: A suit is a proceeding involving damages due to personal injury, property damage, or bodily injury. It is a civil action, not criminal. Suits also may involve arbitration proceedings and other forms of alternative dispute resolution.

Claim definition: A claim is a “demand” for damages. If a lawsuit involves demands for damages, it is considered a claim. However, not every claim is a lawsuit. Some claims are “requests” for damages, as occurs when an employee doesn’t file a lawsuit but has sent a letter with a complaint requesting money for specific damages. If the request is not met (or not met by a specified date), the employee may then file a lawsuit.

Insurance Coverage: Both claims and suits are typically covered by general liability policies. However, specific circumstances may require endorsements that protect against those particular scenarios.

It’s important to respond promptly to either a suit or a claim made against your company. If you are faced with one, it’s also essential to contact your insurance provider as soon as possible to determine your coverage. Often, providers must approve settlements, such as those made in arbitration, for coverage to kick in.

Ensure you have the proper policies in place by discussing options with your agent.

When Your Living Room Becomes a Lake …

Your home is underwater, and it’s not about its market value. Literally, your home has been consumed by floodwaters. Now what?

Whether the cause is a broken pipe, a storm, or a flooded river, take the following three steps in this order.

Stay safe: It may be tempting to rush in to salvage your belongings, but water can create hazardous conditions. Check for a weakened structure as well as damage to gas or electric lines. It might be extremely dangerous to walk on cracked floors or wade through standing water near electrical shorts. If you even suspect the property is unsafe, don’t enter. If you can safely turn off electrical sources and/or gas, do it before you go in.

Document everything: Take photos (or a video) of the damage before draining the water, removing items, or making repairs. For insurance purposes, it will help to have an accurate depiction of the extent of the damage.

Contact your insurance provider: Notify your agent as soon as possible. Some flood damage is not covered by typical homeowners insurance policies. Communicate with your provider to discover what, if any, coverage is available. Let them know of any repairs you intend to make. Your agent can advise you if you need to wait for an adjuster to inspect your property first. If you do make repairs, document the process with pictures and receipts.

Throughout this process, it’s important to stay in touch with your insurance provider, particularly if yours is not the only property impacted by a flood.

The insurance company can also provide contact information for the Federal Emergency Management Agency, which will be an important source of information if your flood is part of a wider problem. Should your region be declared an official “disaster area” by the government, you may receive additional financial assistance.

Check with your insurance company for information about these and other resources.

Moving? Don’t Forget to Pack Your Moving Insurance

Your belongings are boxed. Your closing is scheduled. You’ve filed dozens of change-of-address forms. What’s left to do for your move?

Have you thought about moving insurance? If you’re hiring professional movers, you may assume you’re covered. This might not be the case. All moving companies are liable for the property they transport. However, their basic liability falls under either “full value” or “released value.” If you pay the extra cost for “full value,” the mover has to repair, replace, or pay for any damaged items. Under “released value” obligations, the mover only has to pay 60 cents per pound per item. If they damage your solid wood bedroom set, those cents won’t add up for you.

Some moving companies offer insurance policies. These work like most coverages: you pay the premium up front as well as a deductible for any claims. If the price seems fair, this policy may be worthwhile. However, check your state regulations to ensure it’s legit. Not all states allow moving companies to sell insurance policies, and it’s not unheard of for moving companies to sell bogus coverage.

The better option may be to obtain your own coverage through your insurance provider. Your homeowners policy may include move coverage, or you may need to add it for a small additional premium. If you need a separate policy, rates are usually based on the value of your possessions.

Is it worth the cost? The answer may depend on how trustworthy your movers are. And how much you care about your belongings.

Allergies Aren’t Funny to Sufferers or to the Rest of Us

Some may find allergy sufferers – who are constantly sniffling and sneezing-somewhat amusing. But according to the Asthma and Allergy Foundation of America (AAFA), allergies are no laughing matter: researchers believe that there are some 50 million allergy sufferers in the U.S., and the cost to reduce nasal swelling alone is in the billions.

We all know the symptoms of nasal allergies – sneezing, a runny nose, a stuffy head, a dry cough, even fatigue. They occur, says the AAFA, when your immune system responds to an allergen – a substance that is usually inhaled. And while allergies can be controlled to a certain extent, there’s no cure.

Indoor and outdoor allergies affect your nasal passages and are triggered by tree and grass pollen, cat and dog dander, and mold spores. You may have one or several types of nasal allergies, and these may place you at an increased risk of more serious problems, such as sinusitis, which causes pain in the face or teeth, post-nasal drip, coughing, and even fever. Sinusitis can be sufficiently serious that over-the-counter remedies may not be sufficient, and a doctor’s visit is indicated.

You can reduce the impact of some allergens by keeping your home dust- and dander-free and, in moister climates, mold-free. For sinusitis, use humidifiers. Steam vapors can help reduce swollen sinus cavities. A warm towel applied to your face may reduce some pressure.

Indeed, allergies are no joke – to sufferers, or to the rest of us, who pay for allergy treatments through rising health care costs.

How Do Medigap Plans Work, and Do I Need One?

Medigap, also called Medicare Supplemental Insurance, is available through private insurers to seniors who meet certain criteria; basically its intent is to pick up where Medicare leaves off.

Eligibility

If you are on original Medicare Part A, which defrays hospital expenses, and Medicare Part B, which defrays doctor services, you may be eligible for a Medigap plan. If you currently have a Medicare Advantage plan, also known as Part C, you aren’t eligible for Medigap.

What’s covered and not covered

Most Medigap policies provide Medicare co-payments and hospital coinsurance payments; they don’t cover hearing aids and dental or vision care. Also, most don’t cover prescriptions. Those individuals with pre-existing health conditions may have a six-month waiting period, but there are exceptions.

The Medigap supplementary plan charges a monthly fee based on where you live and your age. You pay this fee to the insurer underwriting the plan. Once enrolled, the law guarantees renewal as long as you pay your premiums on time. A pre-authorized debit from your checking account will help you avoid a late payment and thus prevent a lapse leading to a possible loss of coverage.

When to enroll

Open enrollment occurs for six months from the first day of your 65th birthday or within six months of signing up for Part B Medicare. Outside this period, you may be declined or pay higher rates for Medigap.

Costs

Medigap plans usually cost more than Medicare Advantage plans, but both have their benefits. If you require a higher level of medical care, Medigap may be best for you; if you have high prescription costs, a Medicare Advantage plan may be a better choice.

With all the changes going on in the healthcare sector, finding out what’s right for you can be difficult, and Medigap, especially, can be confusing. Your insurance agent can help you determine what’s right for you.

Unsure About the Future? You May Still Need Insurance

We know that the main reason individuals buy life insurance is to provide financial support to their loved ones after their death.

But researchers at the Max Planck Institute for Human Development in Berlin, Germany, recently discovered the reason behind the reason people buy life insurance. And it says a lot about human behavior.

According to the Max Planck Institute, when considering the future, risk-averse people are more likely to bury their heads in the sand instead of seeking out the appropriate information to deal with future risks.

And these people are more likely to buy life insurance than those who aren’t as risk-averse.

Would you want to know?

The Max Planck researchers surveyed 2,000 people about what they would want to know about the future, if they had the chance. More than 85% of respondents said they would not want to know when a negative event – such as a divorce or the death of a loved one – was coming. (Interestingly, many also said they would prefer to remain ignorant of positive events. Only 1% of participants consistently wanted to know about future events – positive or negative.)

The researchers then tested several scenarios arising from these findings, including the notion that the people who would rather not know are more risk-averse and more likely to buy life insurance. The testing proved that to be true.

We can all learn from this. If you are inclined to avoid thinking about the future, particularly potentially negative events, you may be more likely to invest in life insurance. The opposite may also be true.

Not afraid of the future?

Life insurance is important. As noted above, it provides essential financial support to your loved ones after your death. Even if you aren’t risk-averse and you don’t have life insurance, you may want to discuss you’re your advisor whether it’s appropriate. Your loved ones’ future may depend on it.