What is employee benefits liability?

For example, suppose your firm hires a new paralegal. The new hire completes the necessary paperwork to be enrolled in the firm’s health plan. However, due to a clerical error by one of the human resource employees, the new teacher is not enrolled in the plan.   Sometime later, the teacher is hospitalized with a severe illness and discovers she doesn’t have any health insurance. As the medical bills pile up, the teacher seeks restitution for the mistake and sues the law firm. A general liability policy does not cover this claim but rather an employee benefits liability policy.

Employee Benefits Liability An employee benefits liability policy typically covers errors and omissions for the following:

• Accurately describing plan benefits and eligibility rules.
• Maintaining files and records related to benefits.
• Enrolling, maintaining, and terminating employees, eligible family members, or beneficiaries in benefit plans.

Covered Benefits

What constitutes “employee benefits”? This term generally includes the following:

• Insurance Life, accident, dental and medical, and other types of insurance
• Plans Pension, profit sharing, stock ownership, and savings, and other plans
• Benefits Social security, workers compensation, disability, and unemployment benefits
• Additional Tuition assistance, maternity leave, etc.

Policy Limits

This Liability coverage usually includes two separate limits. The Each Employee limit is the most the insurer will pay for any one employee, their family members, and beneficiaries. The Aggregate limit is the most the insurer will pay for all acts, errors, or omissions.

Cost

Employee benefits liability is a relatively inexpensive coverage to purchase. Policies will start with an annual premium of $250 to $300 and increase as the number of employees at your firm increases.

If you are interested in receiving a quote for your law firm, please contact our office.