Employment liability question

KathiHR

We have a terminated employee threatening to sue over failure to properly notify on COBRA benefits (long story where I get caught between state statutes, federal regulations, & the DOL.) Anyway, this week I received her "demand" letter for her alleged damages from losing her insurance (even though she still has 30 more days to elect COBRA.) Our attorney is taking care of this & I'm sure it will all be fine.

But here's my concern. I faxed over the information to our liability carrier to put them on notice of possible impending litigation. Now our carrier is telling us that our employment liability insurance covers liability stemming from "employment" claims, but not from "employee benefit" claims. According to them, that's a separate category of coverage. We carry employer's liability. The CFO, who's responsible for all our risk management, was not too happy with our carrier when I broke this news to him. I told him I've never heard of this distinction before. So I'm starting my research. Is this common? Anyone else heard of this distinction in "claims arising from employment" vs. "claims arising from benefits"?

Thanks for your help.

Kathi

hrmania

Most EPL policies cover "wrongful employment acts" and define them sepcifically, i.e. defamation, wrongful termination, discrimination, hrassment, etc.

Most policies exlude claims arising from FLSA, COBRA, ERISA, etc.

Different companies may offer broader coverage (usually at higher prices!)

You should obtain a copy of your policy and read it carefully...consult with the agent who sold the policy...and be sure you are getting the coverages you want.

KathiHR

Thanks for the info. I didn't realize this was a common exclusion - we've never had a claim arising from COBRA before. I will review the policy as you suggested... unfortunately, live & learn. But fortunately on this one, she has no damages because she's attempting to sue before her COBRA election period has expired - she really doesn't want COBRA, she wants money.

Thanks,
Kathi

Shadowfax

Forget the policy. Only rule you need to know is: If a claim would require your insurance carrier to defend you or pay damages, it is excluded! Insurance is a win/lose proposition:they win/you lose. Best scam goin'!

Don D

I'm no lawyer but, reading your post, I'm wondering what she thinks the damages are. If she's still in the election period, she hasn't lost a thing. She can enroll now and pay the back premiums and recover whatever it is she might have paid out in covered medical costs.