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Why Employee Liability Coverage Is Important

Every business is susceptible to mistakes, even if they are meticulous about following processes and procedures. In some cases, mistakes can lead to financially devastating lawsuits, especially when they affect employees and their rights to certain benefits offered by the company or required by law. Businesses that want to avoid being responsible for the full legal cost of defending themselves against allegations should ensure that they purchase employee liability insurance coverage.

Coverage Details

Employee benefits liability coverage is designed to offer a degree of protection to companies that make errors or omissions in regard to employee benefits. These errors may involve describing, filing or enrolling employees in benefit programs, including (but not limited to) the following:

  • Insurance (medical, life, accidental, dental and others)
  • Benefits (disability, workers’ compensation, social security and unemployment)
  • Available plans (profit sharing, pension, savings, stock ownership and others)
  • Other (maternity leave, tuition assistance and other programs offered by the business)

If the business fails to adequately describe or administer any of these benefit programs, they could face one or more lawsuits from unhappy employees affected by their errors or omissions.

Consequences of Inadequate Insurance Coverage

Employers that do not have adequate employee liability coverage could face catastrophic consequences, including financial devastation due to steep legal costs. In some cases, bankruptcy could be the end result of failing to secure adequate insurance coverage. Businesses that want to minimize their risks should immediately look for an insurance policy that offers adequate employee benefit liability protection.