Understanding Employment Practices Liability Insurance

Today, companies are facing more risks related to employment practices than ever before. With the increasing number of lawsuits alleging discrimination, wrongful termination, harassment, retaliation, and other employment-related issues, businesses must take proactive measures to protect themselves. That’s where Employment Practices Liability Insurance (EPLI) comes in. In this article, we’ll discuss what EPLI is, how it works, and why it’s essential for your business.

What is Employment Practices Liability Insurance?

Employment Practices Liability Insurance (EPLI) is a type of insurance that provides coverage for legal claims brought by employees or job candidates against employers for wrongful acts committed in the workplace. EPLI policies typically cover claims related to discrimination, harassment, retaliation, wrongful termination, and other employment-related issues.

EPLI policies also typically cover claims brought by third parties, such as customers or clients, who allege they were harmed by an employee’s actions or conduct. Such claims might include accusations of sexual harassment or assault, defamation, invasion of privacy, or discrimination.

What Does EPLI Cover?

EPLI policies typically cover a broad range of employment-related claims, including:

It’s important to note that not all EPLI policies are created equal. Policies may have different limits, exclusions, and coverage options, so it’s crucial to read the policy carefully and understand the terms and conditions.

What Does EPLI NOT Cover?

EPLI insurance typically does not cover claims related to bodily injury or property damage, nor does it cover claims that are covered by other types of insurance, such as Workers’ Compensation or General Liability insurance. EPLI policies often have exclusions for intentional misconduct, criminal acts, and fraudulent behavior. For example, if an employee intentionally causes harm to another person or engages in criminal activity, the EPLI policy may not provide coverage.

Why Do You Need EPLI?

As an employer, you face a significant risk of employment-related lawsuits. According to the EEOC, employees filed nearly 72,000 charges of discrimination in 2019 alone. The rise of social media, the #MeToo movement, and increased awareness of workplace issues has made it easier for employees to file claims against their employers.

Even if a claim is unfounded, the legal costs of defending against such lawsuits can be significant, and the damage to an employer’s reputation can be even more severe. EPLI provides a safety net for businesses facing such claims by covering legal costs, settlements, and judgments.

How Does EPLI Work?

EPLI policies typically have a deductible, which is the amount that the employer must pay out of pocket before the insurance coverage kicks in. Once the deductible is met, the insurance company will pay for legal defense costs, settlements, and judgments up to the policy limits.

When purchasing EPLI coverage, it’s essential to work with an experienced insurance broker who can help you understand the policy options and limitations. You’ll want to choose a policy that provides adequate coverage for your specific business needs.

FAQ about EPLI

1. Is EPLI only for large companies?

No, EPLI is available for companies of all sizes, from small businesses to large corporations. Employment-related claims can happen to any business, regardless of size or industry.

2. How much does EPLI cost?

The cost of EPLI coverage depends on several factors, such as the size of your business, the industry you’re in, and the coverage limits you choose. Generally, the cost of EPLI coverage is relatively low compared to the potential risks and costs of employment-related lawsuits.

3. Can you purchase EPLI as a standalone policy?

Yes, EPLI is available as a standalone policy, or it can be added as an endorsement to a broader insurance policy, such as a Business Owner’s Policy (BOP).

4. Is EPLI required by law?

No, EPLI is not required by law, but it’s highly recommended for employers. Without EPLI coverage, businesses face significant risks and expenses related to employment-related lawsuits.

5. What should you look for in an EPLI policy?

When choosing an EPLI policy, you must consider the policy limits, deductibles, coverage options, exclusions, and the insurance company’s reputation and financial stability. Work with an experienced insurance broker to help you navigate the options and choose the best policy for your business.

In Conclusion

Employment Practices Liability Insurance (EPLI) is an essential tool for modern businesses. With the rise of employment-related lawsuits, companies of all sizes and industries must take proactive measures to protect themselves. By purchasing EPLI coverage, businesses can safeguard their financial stability and reputation in the face of potential legal claims. Talk to an experienced insurance broker today to learn more about how EPLI can benefit your business.