Friday, October 9, 2009

We Gave You Benefits, and You're Suing Us?

Employers who provide employee benefits are sometimes sued by their employees for mistakes made in administering those benefits. Companies who provide employee benefits should consider adding Employee Benefits Liability to their policies.

EBL covers damages caused by an error or omission committed in the "administration" of your "employee benefits program." Below are definitions from an EBL policy that define the covered acts a little more clearly:

"Administration" means:

1. Counseling, "employees," including their dependents and beneficiaries, with respect to the "employee benefits program";

2. Handling records in connection with the "employee benefits program"; or

3. Effecting or terminating an "employee's" participation in a plan included in the "employee benefits program";

"Employee benefits program" means the following plans:

1. Group life insurance, group accident or health insurance, flexible spending plans, profit sharing plans, pension plans and stock distribution plans; provided that no one other than an "employee" may subscribe to such insurance or plans;

2. Unemployment insurance, social security benefits, workers' compensation and disability benefits.

For example, failure to properly enroll someone on the health plan may leave an employee without coverage for a medical procedure.

The premium for this coverage runs about $200 - $400 per year, depending on the number of employees. Larger companies may pay more. Ask your agent about it. If you don't have an agent, give me a shout!

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