Claim Scenario: Employee Benefits Liability Insurance

From time to time we like write about claims scenarios that we come across to point out the necessity of certain insurance coverages. Recently, we care across a claim that highlights the need for employee benefits liability insurance and how it can protect your restoration company.

Description of Event:

The health plan of restoration contractor recently denied payment of health costs for an employee who was hospitalized following an accident. The HMO claimed the employee never notified the HMO of her hospitalization, as required under the health plan.

In fact, the employee had called her employer’s plan administrator, who advised her that because she’d called the employer it wasn’t necessary that she call the HMO, forgetting that the notification rules had recently changed. The employee sued her employer and the plan administrator over the benefits denial, alleging that she had received improper advice.

Cause of Action: Denial of Benefits, Improper Advice

Resolution: The case settled for more than $500,000—the amount of the benefits, plus attorney fees.

As you can see, something as simple as proving the wrong advice in regards to your company’s health plan can lead to very expensive claims. Employee benefits insurance is designed to cover these exact type of scenarios. Furthermore, this type of coverage is extremely cheap (starting at just a few hundred dollars a year). Most restoration contractors don’t purchase the coverage, though, because they simply don’t know that it exists.

If you would like to find out more about employee benefits insurance and how it can help your company, please feel free to give our office a call.