The specter of employee liability can cross the threshold of any company’s door. To mitigate the many risks that are inherent in doing business, a policy can be purchased to protect your company from instances of negligence in the course of administering their employee benefit plans. Generally, acts of administration may be defined as the provision of advice, and/or the interpretation of coverages-something that can happen any day, every day at work. Such negligence may also occur when an employer (or the employer’s accountant, actuary, trustee, or recordkeeper) makes administrative errors in determining the amount of contributions to benefits that the employer and/or the employee should be making. In many cases, this coverage is added as an endorsement to your existing coverage such as the commercial general liability policy (as it is often less expensive to add the endorsement onto another policy) yet it can be purchased on a standalone basis as well. It’s a good thing, too-considering how mistakes can happen.
Consider these typical failures which can result in claims
- Failing to properly enroll new hires in the company’s group health plan within the requisite timeframe of the automatic enrollment period, which could leave them without medical coverage-a disastrous event. Should this happen, the new hires would have to then qualify for coverage by successfully passing the underwriting questions and requirements established by the insurer in order to be added to the employer’s group medical insurance program. In the event any of the new hires have medical issues-e.g., morbid obesity, heart disease, chronic illnesses, etc.-they could end up with severely restricted coverage or even none at all.
- Failing to provide complete and accurate information to employees regarding all of the coverages and options that they have available to them via their employer
sponsored benefit plans.
- Failing to offer departing employees (whether departing voluntarily or through termination) continued benefits through COBRA for a defined period of time after they leave the company, as required by federal law.
Don’t go it alone on this one
Talk to your professional insurance agent about employee liability and coverage needs so that your agent can tailor a policy to meet the needs of your business and help ensure your business and your employees are well protected.