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Employee Benefits Liability Insurance 101 & Cheap Quotes

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What is employee benefits insurance and employee benefits liability? How are these related? Read this guide to know the answer. 

Employee Benefits Insurance 

employees hugging

Employee benefits insurance refers to insurance policies that an employer like you should provide to employees, such as:

  • Medical insurance

  • Dental insurance

  • Vision insurance

  • Group health insurance

  • Life insurance

  • Disability insurance

  • Worker’s compensation insurance

Employees serve as the backbone of businesses. Therefore, United States laws ensure that they are catered to adequately. There’s a $2,750 or $4,120 penalty fee per employee  if you fail to provide adequately:

  • Medicare and social security contributions

  • Worker’s compensation insurance

  • Unemployment insurance

  • Health insurance 

  • Professional liability insurance

In application, employee benefits insurance is typically implemented as group plans. You choose the insurance to cover employees, and premiums are paid by you alone or paid with your employees. 

Do these to figure out the best employee insurance for your business:

  • Identify your objectives and budget

  • Assess the needs of each employee

  • List down needs that you can afford to address

Employee Insurance Cost

 red dollar sign and green question mark

According to the U.S Department of Labor, the average cost of employee benefits insurance are the following:

  • $12.06 per hour for civilian workers

  • $20.50 per hour for state and local government workers

  • $10.76 per hour for workers in the private sector

The same report also provides a glimpse of the exact cost of health insurance for employees - a specific type of employee insurance -  which tallies at:

  • $3.09 per hour for civil workers

  • $6.10 per hour for state and local government workers

  • $2.63 per hour for workers in the private sector

Is Getting Employee Benefits Insurance Important?


employees looking at a laptop

Just recently, the Bureau of Labor Statistics reported that some 4 million workers had quit their jobs in August 2021, and this proves how easy it is for employees to leave. 

Employee benefits insurance is essential as it can help you hire and retain promising talents. At least 60% of employees say that they will commit to a low-paying job with great benefits, and  42% state that they will keep their jobs if employers improve existing benefits.

In addition, Clutch’s study provides more specific insights such as:

  • 55% of employees say that health insurance is one of the most important employee benefits insurance

  • Only 21% only enjoy childcare benefits.  We suggest you provide this to your employees right now, especially with the situation at present. Childcare benefits will help to prevent reduced work hours, missed key deadlines, leave of absence, and resignation

  • 23% of employees do not receive any benefits from their employers

  • The younger faction of employees (e.g., Millenials) puts more importance on paid overtime and paid vacation than benefits in the form of employee insurance. 

How To Find The Best Employee Benefits Insurance?

We suggest you compare quotes. In fact, you can compare quotes online right here from the best employee benefits insurance companies by clicking the “Get Quotes” button below and completing the questionnaire. You will get employee benefits insurance quotes from top companies and see which insurance features and prices are offered by which company and choose the best. 

This way, you can save a lot, as the companies are well aware that they are competing in a marketplace, and have to offer the best value and best rates, otherwise the customer, you, will choose a different insurance company to work with than them.

What Can Go Wrong?

Sometimes, employee benefits insurance is hard to manage. Mistakes can happen out of the blue resulting in lawsuits or claims from employees that can incur losses to your business. 

An insurance that will cover exposure in employee benefits insurance errors is employee benefits liability. Read the following sections to know more about it.



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Employee Benefits Liability

What is employee benefits liability?

Employee benefits liability insurance (EBL) protects your business from clerical mistakes in employee benefits insurance administration, resulting in employee damage that can become a reason for filing a claim.

Errors and omissions where employee benefits liability insurance applies are as follows:

  • Failure of your business to enroll, maintain or terminate employees eligible for a benefits package.

    "Your human resource manager fails to include a new employee in the medical benefits package of the company, and no one notices this. The new employee suffers from an accident, gets hospitalized, and has to pay out of his own pockets,  as the company's health benefits package doesn't cover him due to HR's mistake. He then asks the company to reimburse through a lawsuit."

  • Misunderstandings as to what your business benefits package covers for employees and oversights in employee benefits insurance endorsement

    "An entry-level worker gets dental service through the company's dental benefits, as explained by HR. However, in truth, the dental benefits only apply to seniors and executives. The worker filed a lawsuit asking the company to pay for the dental service, as his misconception was due to HR's oversight to clarify who is eligible."

  • Losing employees' files or records important to their eligibility for a benefits package in the company unintentionally.

    "HR loses an employee's files to a company benefit, which the employee needs to enjoy a health-related service. As a result, the employee has to pay using his own money, subject to company reimbursement through a lawsuit."

In connection, here are some office mistakes where employee benefits liability applies:

  • Accidentally deleting the files or records regarding employee benefits saved in a computer or database

  • Destructions of the files or records due to flood, fire, and shredding

  • Files and documents on employee benefits got corrupted, and HR failed to create a backup as a countermeasure. 

Fiduciary Liability Insurance vs. Employee Benefits Liability 

The difference between fiduciary liability insurance and employee benefits liability insurance lies in what situations a clerical error is committed. 

Employee benefits liability insurance only applies to clerical errors and omissions committed by the company regarding the administration of employee benefits packages.  In application, employee benefits liability is part of fiduciary liability insurance or commercial general liability insurance. 

In contrast, fiduciary liability insurance applies to oversights committed by administrators, trustees, and other fiduciaries in implementing employee benefits packages and other obligations mandated by the Employee Retirement Income Security Act (ERISA) and its congressional amendment.

In other words, fiduciary liability deals with company benefits and benefits mandated by ERISA that an employee fails to enjoy, whereas employee benefits liability insurance only applies to company benefits. 

Employee Benefits Liability Coverage

Employee insurance liability coverage includes costs for lawsuits and settlements resulting from mistakes in providing:

  • 401K/retirement

  • Group life insurance

  • Group health insurance

  • Life insurance

  • Disability insurance

  • Profit-sharing plans

  • Pension plans

  • Employee stock subscription plans

  • Workers comp insurance

  • Unemployment insurance

  • Eyecare insurance

  • Other benefits your company provides

Eligibility for Employee Benefits Liability Insurance

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Your company is eligible to claim its employee benefits liability insurance only for clerical mistakes in providing employees their benefits. Clerical in this sense is treated as: 

"A mistake made in a letter, paper, or document that changes its meaning, such as a typographical error or the unintentional addition or omission of a word, phrase, or figure" (Source: Law Library  - American Law and Legal Information). 

Here's what you should do to ensure that a carrier approves your claim:

  • Identify the clerical error (look at enrollment to the benefits, misspellings of employees' names, misunderstandings in the coverage of the company benefits) 

  • Identify who made the error (is it the HR, the assistant, or another staff concerned with sorting out company benefits?)

  • Clearly state how the clerical error was accomplished. This is very important as most carriers want to hear specific details.

An important thing to remember is that employee benefits liability insurance won't cover criminal, dishonest, or malicious errors and omissions done with your consent. Upon filing a claim, the insurance company will investigate you thoroughly to see if the circumstances match what the EBL covers.

Employee Benefits Liability Limits 

The limits insurance companies implement in their employee benefits liability policies are:

Each person limit is the maximum amount an insurance company pays on behalf of your company for a claim made by one employee only. For example, let's say that each person's limit is $2,000, and one employee files a claim for a $3,000 reimbursement. In this case, the insurance company will pay for the $2,000, and you still have $1,000 to pay out of your company's funds to settle things. 

Aggregate limit pertains to the maximum amount you can claim out of your employee benefits liability insurance. Let's say your aggregate limit is $10,000 and three employees file a claim amounting to $5,000 each. In this case, the insurance company will help pay for only two employees, satisfying the $10,000 limit on your policy. There's still an excess of $5,000 owed to the third employee, and this amount will have to be paid by you. 



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Employee Benefits Liability Cost 

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Employee benefits liability insurance is usually added to commercial general liability insurance or fiduciary liability insurance. Therefore, telling you an average price will be challenging, as it depends on the number of covered employees. That said, the average employee benefits liability insurance cost is about $20 per hour for each employee covered.

Employee Benefits Broker

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It’s great if you can get your EBL insurance company to take care of common issues involving employee benefits administration. Nevertheless, preventing mistakes from happening is all for the best. To do this, consider hiring an employee benefits broker. 

An employee benefits broker is a licensed insurance professional knowledgeable in all the employee benefits programs your company should provide to employees. These are the pros to hiring one:

  • Avoid confusion as to which employees an employee benefits insurance applies.

  • Find the benefits program appropriate to your business industry and the kind of work the employees do.

  • Helps you find insurance companies best suited for your employees’ benefits package.

  • Help the HR oversee smooth and accurate employee benefits administration.

So what’s the best way to hire? We suggest you follow SHRM’s method for optimal employee benefits broker selection:

  • Building a solid candidate pool - we suggest that you accept applications from 15 applicants or more who have at least 2 -3 years of experience and have a strong work portfolio in the field

  • Asking a request for a proposal from qualified candidates -  a request proposal will help you test the practical knowledge of the applicants

  • Picking finalists by comparing and scoring answers - score and compare based on how constructive and applicable the answers are with regards to your business

  • Conduct the final interview - this is the final step that’s important to know how each applicant best fits your team

Employee Benefits Liability: Where To Get?

Suppose you’re looking to get employee benefits liability for your business. In that case, all you have to do is click the ‘Get Quotes’ button on this page and complete the questionnaire that follows to compare employee benefits insurance quotes online from the best EBL insurance companies and get the cheapest rates! 

Some of the companies you may be comparing rates from by doing so are: 

  • Chubb 

  • Travelers

  • Zurich

  • Liberty Mutual

  • AIG

  • Berkshire Hathaway

  • CNA 

  • The Hartford

  • Nationwide

  • Tokio Marine (USA)

  • Assurant

  • Fairfax Financial

  • W.R Berkley Corp

  • AXA S.A

  • Progressive

  • And more!

Key Takeaways 

  • Employee benefits insurance refers to insurance policies which an employer is obligated to give to employees. Note that some employee benefits insurance is mandated by law. 

  • Employee benefits insurance will help to attract skilled and experienced workers. Studies have proven that employees don’t only aim for a competitive salary.

  • Clerical errors and omissions can happen while managing the employee benefits insurance of your company. An employee benefits liability insurance will protect your business from financial losses. 

  • There are two limits to employee benefits liability insurance; each/per person limit and aggregate limit.

Regardless if you work with 1-5 employees or 10-20 employees, it’s best to get employee benefits insurance if you have the budget. Doing so shows that you care for your employees. As for employee benefits liability, have it when more than ten employees are covered by your businesses’ employee benefits insurance plan.  Thanks for your time. Bookmark this page because other great insurance content is coming soon!



Compare Employee Benefits Insurance Quotes Online

Get all the best quotes from leading providers in a click of a button!

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2021-09-24 15:00:00

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