What is EPLI Insurance?

Employment Practices Liability Insurance (EPLI) is a type of insurance policy designed to protect companies from the risks associated with workplace discrimination, harassment, or wrongful termination claims. In today’s litigious society, a single lawsuit can have a significant impact on a company’s financial well-being. This is why many businesses choose to purchase EPLI policies to safeguard their business against these expensive legal claims.

How Does EPLI Insurance Work?

EPLI insurance works by providing coverage for legal expenses and damages incurred due to lawsuits brought against your company by employees or job applicants. This type of insurance can cover a range of employment-related claims, such as:

When a claim is filed, the insurance company will investigate the allegations and provide legal representation for your company. If the case is settled or goes to trial, the policy will cover settlement costs, judgments, and legal fees.

Who Needs EPLI Insurance?

Any business that has employees should consider purchasing EPLI insurance. It is especially important for businesses that work in industries with a high risk of employment claims, such as:

• Finance
• Healthcare
• Education
• Government
• Non-profit organizations

However, it’s not just large corporations that need this type of insurance. Small businesses with just a handful of employees could also benefit from an EPLI policy. In fact, small businesses are often hit the hardest by employment-related claims, as they often lack the legal resources and manpower to defend against such claims.

What Does EPLI Insurance Cover?

EPLI insurance typically covers legal expenses and damages associated with employment-related claims. This can include:

• Compensatory and punitive damages
• Settlements and judgments
• Legal fees and court costs
• Investigation costs
• Lost wages and benefits
• Emotional distress and mental anguish

It’s important to note that EPLI insurance policies vary by carrier and specific policy language. Be sure to read your policy carefully to understand what is covered and any exclusions or limitations.

How Much Does EPLI Insurance Cost?

The cost of EPLI insurance can vary depending on several factors, such as:

• The size of your business
• The industry you work in
• The number of employees you have
• Your claims history
• The coverage limits you choose

The cost of the policy will typically increase as your coverage limits increase. However, the cost of EPLI insurance is often much less expensive than the financial impact of an employment-related claim.

FAQ

What is the difference between EPLI and D&O insurance?

EPLI insurance covers claims made by employees, such as discrimination or harassment. Directors and Officers (D&O) insurance, on the other hand, covers claims made against the company’s board of directors or officers. While both policies cover different types of claims, they can both provide valuable protection for your business.

Do I need EPLI insurance if I have an employee manual?

While having an employee manual can help prevent employment-related claims, it does not provide complete protection. Even with a manual in place, employees can still bring legal claims against your business. EPLI insurance can provide additional protection and help cover the costs associated with such claims.

Can I purchase EPLI insurance on its own?

Yes, many insurance carriers offer EPLI insurance as a standalone policy. However, it may also be available as an endorsement to your existing business insurance policy.

What should I look for in an EPLI policy?

When shopping for an EPLI policy, look for coverage that is tailored to your business’s specific needs. Consider the coverage limits, exclusions, and other policy terms carefully. Additionally, look for an insurance carrier with experience handling employment-related claims and a strong financial rating.

What should I do if an employee files a claim?

If an employee files a claim, it’s important to take the allegations seriously and seek legal advice. Contact your insurance carrier immediately to report the claim and follow their guidance. Additionally, be sure to document all steps taken in response to the claim.