Product Update

Employee Benefits Liability Coverage Examined in Commercial Liability Insurance


This Commercial Liability Insurance (CLI) release examines in detail the standard endorsement for providing limited employee benefits liability coverage under a commercial general liability (CGL) policy.

Employers who offer and manage employee benefits programs—pension or retirement savings plans, group life or health insurance, or a range of other programs—face legal liability exposures in connection with these offerings. Some of these exposures are created by statute, under federal and state laws that define the responsibilities of employers in guaranteeing the financial soundness of benefit programs they manage. These laws impose a fiduciary responsibility on employers that can be insured under a fiduciary liability policy. Other exposures associated with employee benefits program arise from ordinary negligence in administering the program—communicating with employees about the availability of the benefits being offered, enrolling employees in the program, or making adjustments to participation in the program. These ordinary administrative functions create something comparable to an "errors and omissions" exposure for employers that can be insured by endorsing a general liability policy. One standard endorsement for accomplishing this purpose is the Insurance Services Office, Inc., Employee Benefits Liability Coverage (CG 04 35) endorsement, and this CLI release expands our analysis of the endorsement's provisions. As explained in our analysis, it is important to keep in mind that CG 04 35 does not cover the fiduciary liability associated with employee benefits programs. Those exposures are insurable under a fiduciary liability policy.