Most charter schools are required to purchase employee benefits liability insurance.  However, few of them understand this coverage and how it protects charter schools from claims.   So over the next two blog posts, we’re going to discuss employee benefits liability, how it provides coverage to charter schools, what the standard limits are, and how much this coverage costs.

What is Employee Benefits Liability Insurance?

Most charter schools offer benefits such as health insurance or vision care.  And while these benefits can help you attract and retain good employees, they must be administered correctly to avoid potential litigation.   Errors in managing your employer-sponsored benefits will lead to disgruntled employees, but they can also lead to lawsuits against your charter school.

Real-Life Example

Minor clerical errors can have significant consequences.  For example, suppose your charter school hires a new maintenance employee.  The new employee completes his paperwork to enroll in the company-sponsored health plan as part of the hiring process.   However, the new employee is not enrolled due to a clerical error by the human resources department.  Several months later, the new employee is hospitalized with a severe illness and discovers he has no health insurance.  As the medical bills pile up, the new employee seeks restitution by suing the charter school.

Employee Benefits Liability

Claims like those described above are not covered under a commercial general liability policy.  For your charter school to be protected, it must purchase an employee benefits liability insurance policy.   Employee benefits liability insurance covers damage your charter school becomes legally obligated to pay because of an act, error, or omission in the administration of your employee benefits programs.

Claims-Made Policy

Employee benefits liability policies are usually written on a claims-made form.  This means that it must have occurred after the retroactive date listed on the policy for a claim to be paid.   And, instead of the policy in place at the time of the incident responding to the claim, the policy currently in force will respond and pay for the claim.