Consider Offering Employee Benefits Liability (EBL) Insurance
By Mike MacGillivray, agent and broker at Shaw, Moses, Mendenhall & Associates
Many of your business clientele probably offer a wide range of benefits to their employees. After all, it is a great way to attract and retain talent. But your business clientele have a complex task: Benefits administration can be an intricate endeavor, explaining benefits to employees, enrolling them in plans, maintaining beneficiary information, all while keeping meticulous records. Mistakes can certainly happen.
When a mistake does happen, how might that affect your client? Allow me to cite an example: A property management company hires Carl as a new maintenance worker, and Carl completes his paperwork to enroll in the company health plan. He gives the paperwork to Jill, the company’s human resource manager, but Jill makes a simple, innocent clerical error that prevents Carl from being enrolled in the plan. The error goes unnoticed. Two months later Carl is hospitalized for a serious illness and while at the hospital, discovers he has no health insurance. To cover his medical bills, billed at full retail hospital rates due to lack of insurance, he sues both Jill and the property management company.
In situations like the example noted above, the legal defense costs and the costs to cover an injured party’s medical bills can severely strain a company’s financial resources and can potentially cripple a smaller company. Innocent clerical mistakes like this can happen, but how can you help protect your clientele should they occur? Offer Employee benefits liability (EBL) insurance.
EBL insurance is coverage that offers companies financial protection from lawsuits and claims that stem from errors, mistakes, or mismanagement in the administration of employee benefits. Not only will the coverage pay legal costs to defend your client, but it will also reimburse the medical costs of the injured/ill party.
EBL insurance is cost effective. Your clients can add $1 million of coverage to their business liability policies for only a few hundred dollars a year. If more coverage is needed, it can be purchased at cost effective rates.
EBL insurance is an especially important coverage for your clients to have if they offer group health benefits, but it is also beneficial to any of your clientele offering other benefits such as life insurance or disability coverage.
It should be noted that insurance companies offer different forms of EBL insurance. Some cover medical expenses of an injured party at full retail hospital rates, while others cover medical expenses at the contracted rate, so it is important to know how medical expenses are covered. I recommend your client look into a policy that covers medical expenses at the full hospital rate.
Whether or not your client needs EBL insurance, it’s nice to have the conversation to let them know it is available. They will appreciate it, and it could very well save them from the financial ramifications of a future innocent clerical error in the administration of employee benefits.
Mike MacGillivray serves on the USC Marshall School Of Business Risk Management Advisory Council, the board of IBA-BGP, an affiliated chapter of Independent Insurance Agents & Brokers of California (IIABCal ), and on the Lead Up Council for IIABCal. He’s a licensed insurance agent and broker at Shaw, Moses, Mendenhall & Associates in South Pasadena.