Prioritizing Your People: Employee Benefits Liability Coverage, Limits, and More

Taking care of the Rollo family is one of our top priorities. We believe offering employee benefits is one of the most tangible ways to do so. This priority spans across industry lines and marks a means of attracting and retaining top talent in any competitive landscape. However, the intricacies of managing these programs can expose businesses to significant risks. That’s where Employee Benefits Liability (EBL) coverage steps in, providing crucial protection against potential missteps. At Rollo Insurance, we’re dedicated to helping companies take care of their people just like we take care of our Rollo team members. We help Texas businesses understand and secure the right EBL coverage to safeguard their operations and their workforce.

Understanding How Employee Benefits Takes Care of Your People

EBL insurance protects your business from claims arising from errors or omissions in the administration of your employee benefits programs. This includes a wide range of offerings, such as health insurance, retirement plans, life insurance, disability coverage, and more.

Employee Benefits Liability Coverage Limits: How Much is Enough?

When considering EBL coverage, a critical question arises: “What limits should I choose?” This is essentially asking, “How much financial protection do I need?” The appropriate limit depends on several factors, including:

• The size of your workforce: A larger workforce generally necessitates higher limits due to the increased potential for claims.
• The complexity of your benefits program: More complex programs, such as those with multiple health plan options or defined benefit retirement plans, require higher limits.
• The potential financial impact of a claim: Consider the potential cost of legal fees, settlements, and judgments.
• Your company’s financial stability: Higher limits provide greater protection but also come with higher premiums.

A common approach is to align EBL limits with your general liability coverage or to select a limit that reflects the potential financial exposure of a significant benefits-related error.

Employee Benefits Liability Coverage vs. Workers’ Compensation

It’s crucial to distinguish between EBL and workers’ compensation. While both are essential forms of coverage, they address different risks:

• EBL: Protects against claims arising from errors or omissions in the administration of employee benefits programs.
• Workers’ Compensation: Covers medical expenses and lost wages for employees who are injured on the job.

In essence, EBL protects against administrative errors related to benefits, while workers’ compensation protects against workplace injuries.

Employee Benefits Liability Coverage vs. Fiduciary Liability

Another important distinction is between EBL and fiduciary liability. Fiduciary liability specifically addresses breaches of fiduciary duty related to employee benefit plans, such as mismanagement of retirement plan assets.

• Fiduciary Liability: Protects against claims of mismanagement of plan assets, or breaches of fiduciary duties.
• EBL: Protects against administrative errors and omissions.

While there can be overlap, fiduciary liability is more focused on the management of plan assets and the decisions made by plan fiduciaries.

Employee Dishonesty Coverage

Employee dishonesty coverage, also known as crime insurance or fidelity bonds, protects your business against losses caused by employee theft or fraud. This is separate from EBL, but is another important coverage to consider. This protects against theft of funds, or assets, by employees.

Common Reasons for Employee Benefits Liability Claims

Several common scenarios can lead to EBL claims:

• Enrollment errors: Mistakes in enrolling employees in benefit plans, resulting in denied coverage or delayed benefits.
• Termination errors: Errors in terminating benefits, leading to gaps in coverage or unexpected expenses for employees.
• Miscommunication: Providing inaccurate or incomplete information about benefits, leading to employee misunderstandings and financial losses.
• Failure to comply with regulations: Errors in administering benefits in compliance with applicable laws, such as ERISA or HIPAA.
• Data entry errors: Inputting incorrect information into benefits administration systems, leading to errors in coverage or payments.

Preventing Employee Benefits Liability Claims

Proactive measures can significantly reduce the risk of EBL claims:

• Implement robust administrative procedures: Establish clear and documented procedures for enrolling, terminating, and administering benefits.
• Provide thorough employee training: Educate employees about their benefits and how to access them.
• Conduct regular audits: Periodically review your benefits administration processes to identify and correct potential errors.
• Maintain accurate records: Keep detailed and accurate records of all benefits-related transactions.
• Communicate clearly and consistently: Provide clear and consistent information about benefits to employees.
• Stay up-to-date on regulations: Keep abreast of changes in benefits regulations and ensure your programs comply.
• Utilize technology: Use benefits administration software to automate processes and reduce the risk of human error.
• Work with experienced professionals: Partner with reputable benefits administrators and insurance providers like Rollo Insurance.

Rollo Insurance: Let Us Benefit You

At Rollo Insurance, we understand the complexities of employee benefits liability and can help you navigate the process of securing the right coverage for your team. We’ll work with you to assess your risks, determine appropriate limits, and tailor a policy that provides comprehensive protection for your business and employees. Your people are our priority. Let’s connect today and we can show you how.