Employee Benefits Liability Coverage

Employee Benefits Liability coverage protects the company against errors or omissions which were made about an employee’s benefit plans.

This kind of coverage is usually an endorsement on another policy like the commercial general liability policy, but it can be a stand-alone policy .

Most claims revolve around clerical errors wherein the employee is not added, added to the wrong benefits, or deleted from coverages. Errors which happen in advice to an employee about a particular benefit or mistakes in calculating the amounts of contributions of the employer or employee are also covered by employee benefits liability coverage.

Such errors are usually in the Human Resources Department, though they can also come from record-keepers, accountants, and trustees.

Here are a few scenarios:

A new employee chooses her benefits in the group medical plan, but the paperwork gets lost at some point after she has finished it. No one notices that it became lost, and there is nothing to trigger an alarm that such a thing happened.

Once the initial enrollment period has passed, the employee is stuck with no health coverage until next open enrollment.

Of course, this in itself is actionable, but if the employee has a chronic illness or has an accident, it becomes crucial, and the company will have to come up with a way to settle the problem.

Employee benefits liability insurance is among the least expensive kinds of coverage, particularly if it is an endorsement. It should, however, be part of your portfolio risk management strategy, and it’s also a way to ensure that valued employees aren’t left in the lurch if errors occur. Be sure to bring this issue up with your licensed insurance professional.

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Liability Insurance: What Does It Cover?

A general liability insurance policy is something all businesses need. Such policies reduce your risk of exposure by protecting the business from personal injury and from property damage which is caused by your business causes by either not doing or not doing properly.

General liability insurance is meant to cover personal injury, bodily injury, property damage, and unforeseen circumstances which affect your business or work product.

What general liability will not cover, however, are such things as failure to perform duties to your industry standard, professional negligence, or product liability.

Now, you may be saying to yourself, “I am an excellent worker in my craft. I go above and beyond all the time.” But accidents do happen. You may be distracted or clumsy one day, and that’s all you need in order to be wiped out if you have no coverage.

Aside from that, even if you are always perfect at your craft, it is not outside the realm of possibility that a client or customer says that your work or product caused them pain and suffering. That client or customer could be 100% wrong or just filing a claim in the hopes that you’ll settle, but that in itself is enough to cost you a pretty penny in lost time from work, lawyers’ fees, or court costs. And that could be enough to drive you to bankruptcy.

Realtors, doctors, accountants, soap and candle makers, and computer repair people are only a handful of the types of businesses which will likely need errors & omissions policies.

As we so often counsel you, talk to your licensed insurance professional for help in determining what coverages you need to protect yourself from risks.

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Insurance for Accountants

Specific to the accountant, it is important to determine with your insurance professional the policy limits of a Professional Liability policy or Errors and Omissions (E & O) insurance.  E & O insurance is additional coverage not covered in the general liability policy.  Accountants, Attorneys, and engineers, need this additional coverage which offers far greater and more specific liability coverage.

A Business Owner’s Policy normally covers all the basic needs for your accounting firm.  This includes basic property and liability protection for business.  More often than not, your Business Owner’s Policy can be added to and coverage(s) extended as your business grows.

Property insurance will include the building your business is located, either owned or leased.  In addition, furnishing, and equipment as well as machinery, tools, computer and phone systems, anything used to conduct business will be protected.

The general liability coverage, not to be confused with the Professional E & O described above covers the firm from being held liable for injury or error.  This includes damage to property as well as to people as well as implied damages.  It is important to remember that liability insurance covers the cost of litigation for these claims.   Additional types of coverage such as loss of income are often included in the business owner’s policy.  Discuss these options with your licensed insurance professional.

Every business, including accounting firms, need to protect the business, the owner, and if applicable, it’s officers and board.  If the firm is large enough, it may wish to consider directors and officer’s liability insurance.  Again, this differs from the general liability and professional liability insurance.

Every business is required to carry worker’s compensation except in Texas. (While not required, it still makes sense.)

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Review the specifics of your business with your licensed insurance professional.  Together, you will be able to determine the proper coverage necessary to reduce the risk exposure of your business.

Consultant Professional Insurance

One of the fastest growing businesses today is management consulting and the outlook for growth is expected to continue through 2018 according to the U.S. Bureau of Labor Statistics.  Large consultant firms have been able to obtain and afford professional liability insurance policies for all the risks these firms face, but smaller ones have not.  However, now there is a company designed with smaller firms in mind.  In particular, those with fewer than 10 employees.

 

The Hartford has a program targeted specifically for smaller firms and individuals to provide a comprehensive program of errors and omissions insurance at reasonable prices.  Coverage range from personal injuries, including libel and slander, negligence and punitive damages when allowed.  Polices also include failure to perform, advice and service.  As the U.S. economy continues to decline, this is one field that may continue to grow.  Yet expectations will increase.  If you are in need of professional liability insurance please talk with your agent or one of ours.

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 Commercial Insurance.Net, LLC Advisor is not an attorney, accountant or certified financial planner and makes no representations or warranties to that effect.  Always check with your chosen professional as to statements made in this blog for your particular situation.

 

What is Errors and Omissions Insurance?

Errors & Omissions insurance is a form of liability insurance for business. Many professions — including real estate agents, attorneys, architects, consultant, web developers and other professions — should have this specialized liability coverage. Almost any type of transaction is subject to causing, or the perception of causing financial harm to another.

This type of liability insurance will help cover legal expenses and court costs as well as any settlements or judgments brought against you or your company for professional services and advice. Aside from “Errors and Omissions insurance, E & O insurance  is known by several names. In addition to Errors and Omissions, it can be known as Professional Liability Insurance and Malpractice Insurance. It’s important to remember this coverage is not normally included in your general business liability insurance.

Errors and Omissions insurance is unique to every situation and carries a variety of coverage as well as exclusions. In general, it is designed to protect the business from legal costs and damages awarded as a result of being found in error, an omission, or a mistake.

Legal costs associated with many lawsuits can cripple a company, and this coverage protects against that and large awards by the court. E & O Insurance doesn’t cover intentional fraud or illegal activity as well as most punitive awards.

It needs to be noted that lawsuits are not just a result of error, but the allegation of error or negligence. In this day, we live in a suit happy society. Many innocent parties are sued for any variety of reasons, not only a just cause. Professional liability or E & O will help reduce the risk of cost associated with being sued.

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When E & O insurance is needed, work with your licensed insurance professional to design the best affordable coverage. Ask questions and make sure you know not only what is covered, but any exclusions in the policy.