Why Your Business Needs Employee Benefits Liability Insurance

If your business offers health insurance, retirement plans, or other benefits, someone on your team administers them, and administration involves human error. Employee benefits liability insurance, often added to a general liability or management liability program, protects you when one of those errors leads to a claim.

What Is Employee Benefits Liability Insurance?

Employee benefits liability (EBL) coverage pays for claims that result from negligent acts, errors, or omissions in the administration of your benefits program. Common examples include failing to add a new hire to the health plan, miscalculating coverage, or giving an employee incorrect information about their benefits. It is a focused coverage that fills a gap most general liability policies leave open.

What Does It Actually Cover?

EBL covers your legal defense costs and any damages you owe when an administrative mistake causes an employee a financial loss. If an employee misses out on coverage because of an enrollment error and incurs medical bills they should have been covered for, EBL can respond. It covers the people in your business who handle benefits day to day.

How EBL Differs From Fiduciary Liability

EBL and fiduciary liability insurance are often confused. EBL covers administrative errors in handling benefits. Fiduciary liability covers breaches of the duties imposed by ERISA on the people who manage the plan and its assets. Many businesses need both, because they address different exposures. If you are unsure which duties apply to you, our overview of who is subject to ERISA is a good starting point.

Who Needs Employee Benefits Liability Coverage?

Any business that sponsors employee benefits and has staff administering them should consider EBL. The more employees and the more complex your benefits, the greater the chance of an administrative error. It is inexpensive relative to the protection it provides, which is why it is frequently added by endorsement.

How to Add EBL to Your Program

EBL is usually added as an endorsement to a general liability or business owners policy, or included in a management liability package. An independent broker can confirm whether your current program includes it and compare options across carriers. Review it alongside the other coverages in your business insurance program.

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Pro Insurance Group is an independent insurance broker based in Elgin, IL, serving clients across Illinois and 40+ states. Because we shop 20+ A-rated carriers, we put the whole market to work on your rate, and we re-shop every renewal so your premium never quietly creeps up. No agency fees, ever.

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