Employee Benefits Liability (EBL) insurance safeguards businesses from errors and omissions during employee benefit plan administration. These errors encompass failing to enroll, maintain, or terminate employees in a plan, and inaccurately describing benefit plans and eligibility rules. EBL insurance extends coverage to various plans like health, dental, life insurance, profit-sharing, workers’ compensation, and employee stock plans, often sold as a standalone policy.
In practical scenarios, EBL insurance can mitigate financial losses. For instance, if an HR manager unintentionally neglects to enroll a new employee in the health plan, leading to the employee’s surprise discovery of being uninsured after an accident, EBL insurance could limit the business’s liability. Similarly, EBL insurance could shield employers from ACA-related claims, such as disputes over misclassification of independent contractors as full-time employees entitled to ACA benefits, provided the misclassification was not deliberate.
It’s essential to distinguish EBL insurance from fiduciary liability insurance. While both cover errors and omissions, EBL insurance encompasses a broader array of plans, while fiduciary liability insurance specifically addresses Employee Retirement Income Security Act (ERISA) exposures for designated plans resulting from wrongful acts. Fiduciary liability insurance also covers breaches of fiduciary duty from negligent acts in plan administration, whereas EBL insurance excludes claims stemming from ERISA violations.
EBL insurance serves as a valuable safeguard against benefits administration mistakes but should complement robust risk management practices. To assess if EBL insurance suits your business needs, reach out to Conservation United for personalized guidance.
