Understanding Employee Benefits Liability (EBL) Insurance for Businesses
Employee Benefits Liability (EBL) insurance is a critical safeguard for businesses. Western National defines EBL insurance as coverage for employer errors during employee benefit plan administration. Mistakes like failing to enroll, maintain, or terminate employees from a plan can expose your business to significant liabilities. Inaccurately describing benefit plans and eligibility rules also poses risks. With offices in Cloquet, Superior, and Hermantown, we understand local business needs and the importance of risk protection. What is Employee Benefits Liability insurance? Let’s find out!
What Does EBL Insurance Cover?
EBL insurance offers broad coverage for various employee benefit plans, including health, dental, life insurance, and profit-sharing plans. It also covers workers’ compensation and employee stock plans. Typically sold as a standalone policy, EBL insurance mitigates the financial impact of administrative errors in these plans.
Real-Life Scenarios Where EBL Insurance Can Help
Scenario #1: Enrollment Error
Imagine an HR manager at your company accidentally fails to enroll a new employee in the company-sponsored health plan. Later, the employee suffers an injury and discovers at the hospital that they are not covered by health insurance. In this situation, EBL insurance could limit your business’s exposure, as the failure to enroll was due to an administrative error.
Scenario #2: Misclassification Lawsuit
Independent contractors have filed a lawsuit, claiming that the company wrongfully classified them and should recognize them as full-time employees eligible for health insurance under the Affordable Care Act (ACA). An EBL insurance policy could shield your business from such claims, provided the misclassification was not intentional.
EBL Insurance vs. Fiduciary Liability Insurance
Many people confuse EBL insurance with fiduciary liability insurance, but understanding the distinction is crucial. Both policies cover administrative errors and omissions; however, EBL insurance specifically protects businesses from errors across a broad spectrum of benefit plans. On the other hand, fiduciary liability insurance focuses on protecting businesses from Employee Retirement Income Security Act (ERISA) exposures related to designated plans resulting from wrongful acts.
Moreover, fiduciary liability insurance offers broader coverage than EBL insurance, extending to breaches of fiduciary duty and negligent acts in the administration of employee benefit plans. Many EBL insurers explicitly exclude claims arising from ERISA violations, making fiduciary liability insurance a complementary protection. To learn more about ERISA violations directly from the source, check out this Department of Labor page. Lots of helpful information there!
Why Choose Reliable Insurance Agency for Your EBL Insurance Needs?
At Reliable Insurance Agency, we specialize in helping businesses all across northern Minnesota and Wisconsin navigate their insurance needs. Our expertise in the intricacies of EBL insurance allows us to help you determine whether it’s the right fit for your business.
EBL insurance is a valuable tool in managing the risks associated with employee benefits administration, but it should complement—not replace—robust risk management practices. Using a line from our friends over at Auto Owners, it makes Simple Human Sense! Because, after all, we make mistakes! Which is why you want a company like Reliable Agency, Inc. to help you build a thorough business insurance portfolio.
Explore our business insurance services or contact Reliable Insurance Agency today. Our dedicated team is ready to assist you from our conveniently located offices in Superior, Wisconsin, and Cloquet and Hermantown, Minnesota.
