5 Reasons You Need Employee Benefits Liability Coverage
What is Employee Benefits Liability Coverage?
As a small business owner, offering health insurance, retirement plans, or life insurance is a great way to take care of your team. But these benefits also come with a lot of responsibility. You’re expected to get everything right—from enrollment forms to deadlines to coverage details.
What happens if you make a mistake?
Employee Benefits Liability (EBL) coverage is a special type of insurance that protects your business if there’s an error in how benefits are handled. These mistakes could include:
- Forgetting to enroll an employee in health insurance
- Giving incorrect details about a retirement plan
- Missing a deadline that causes a gap in coverage
- Failing to update a dependent or beneficiary
Understanding EBL helps you avoid surprise costs—and gives you peace of mind. You can give your business assurance in case anything goes wrong without breaking the bank either. Click here to learn how to save money on other employee benefits.
5 Reasons You Shouldn’t Skip EBL Coverage
1. Mistakes Happen—And They Can Cost You
Even with good systems and smart people, mistakes still happen. If an employee loses coverage or can’t use their insurance because of an error, they may take legal action. That could mean paying out of pocket for their medical bills—or facing a lawsuit. Defending and settling employment-related lawsuits costs businesses an average of $160,000—an amount that can be devastating for small companies.
EBL coverage helps protect you from these costs when the mistake was unintentional.
2. You Offer More Than Just Health Insurance
If you offer multiple types of benefits—like dental, vision, 401(k), or life insurance—you have more things to manage. Every benefit comes with paperwork, deadlines, and legal requirements. The more benefits you offer, the more chances there are for errors.
EBL coverage acts as a safety net.
3. Rules Like ERISA and COBRA Are Easy to Misunderstand
Benefits laws can be confusing. You’re expected to follow rules like ERISA, COBRA, HIPAA, and the Affordable Care Act. But most small business owners don’t have time to learn every detail.
If you make a mistake related to compliance, employee benefits liability coverage helps protect your business from the financial impact.
4. Your Regular Business Insurance Doesn’t Cover This
Many business owners think their general liability policy protects them. It doesn’t. EBL is a separate coverage that fills the gap when something goes wrong with benefits administration. Not sure where your benefits stand?
Use our free Employee Benefits Benchmarking Tool to get a personalized score and tips on how to improve.
5. It’s Simple to Add and Won’t Break the Bank
EBL coverage is affordable and easy to include in your existing policy. It’s often part of an Employment Practices Liability Insurance (EPLI) plan—or can be added as a rider. The cost is usually small compared to the financial damage a mistake could cause.
It’s a small investment with big protection.
How KBI Benefits Helps You Stay Covered
At KBI Benefits, we don’t just help you build great employee benefits—we help you protect them.
Here’s how we support small businesses like yours:
- Design benefits plans that work for your team and your budget.
- Handle compliance paperwork and deadlines.
- Offer employee education so your team knows what they’re getting.
- Keep you informed on law changes and coverage risks.
- Help you avoid costly mistakes in the first place.
Schedule a free strategy call and talk with a KBI agent about adding EBL coverage to your protection plan.
