Is Employee Benefits Liability the same as Employers Liability? And if not, then why oh why are the names so similar?

The answer to the first question is no – EBL and EL are two separate coverages found on separate policies.

As to the second question – I wish I knew! It’s another situation where the details of P&C confuse both consumers and newer agents.

Last week’s post discussed Employers Liability, which is the second coverage found on Workers Compensation policies, except in 4 states.

Employee Benefits Liability covers an employer’s errors and omissions in the administration of its employee benefits program. Such a program typically includes health insurance, life insurance, retirement plans, etc.

An example of a claim that EBL would respond to:
ABC Marketing offers health insurance to all new employees. New Employee Sandra Smith accepts the offer. The HR department fails to enroll her. Some weeks later, Sandra is diagnosed with a life threatening disease. The health insurance carrier is unwilling to provide coverage.
ABC Marketing is liable to Sandra, and perhaps also to her family. The EBL policy will provide defense and damages coverage to ABC.

This type of coverage is a backup for benefits administration. In no way should it be considered a substitute for good risk management.

EBL is almost always found on an endorsement to the GL policy, rather than its own standalone policy. ISO uses form CG 04 35. The limits should match the GL limits, such as 1/1 or 1/2. The premium is extremely inexpensive, starting at around $100.

The coverage uses Claims Made form instead of Occurrence. This is not surprising, because it covers a type of E&O. Since Claims Made is used, the coverage will also have a retroactive date.

A final note regarding Umbrella. EBL, as a type of liability, should be on the underlying schedule on the Umbrella. There is often very little to no premium to add it.

Next week’s post will follow a theme, and address the next coverage with a similar name: Employment Practices Liability.