Employment Practices Liability Insurance


What Is Employment Practices Liability Insurance, or EPLI?

Legislation  such as the Family Medical Leave Act and the Americans With Disabilities Act,  plus a growing number of job-related lawsuits and claims, have created the need  for business owners to consider a type of insurance known as employment  practices liability insurance, or EPLI. An EPLI policy offers insurance  protection against claims and lawsuits that are brought against a business, its  officers or directors, or its employees and managers. These policies generally  cover charges in the following areas:

  • Gender, age and other types of discrimination
  • Sexual harassment
  • Wrongful termination or discipline
  • Negligent compensation, promotion or hiring       decisions
  • Breach of contract for employment
  • Emotional distress or mental anguish
  • Invasion of privacy
  • Libel or slander
  • Employee benefits mismanagement

While some  directors’ and officers’ insurance policies contain employment practices  liability insurance coverage, such coverage can be limited to directors and  officers, and may have greater exclusions than a standalone EPLI policy.

How does employment practices  liability insurance protect your business?

All companies,  regardless of size, should look to their personnel policies as the first line  of defense against both the number and severity of employment-related claims.  EPLI coverage is another valuable tool in a comprehensive risk-management  arsenal.

EPLI policies  are written on a claims-made basis. This simply means that covered claims must  be reported to the insurance company while the policy is in effect, or within  an extended period specifically described in the policy. In addition, the event  leading to the claim must have occurred either on or after a specific date –  typically the date when the EPLI policy commenced. Some insurers offer extended  retroactive dates or full protection for earlier claims, but you should be sure  you understand these terms.

The cost of  EPLI coverage will vary based on the type, size and risk profile of your  business. The insurance company may also want to see your written personnel  policies to help them determine the risk and cost of your EPLI policy.

Following are  additional factors that affect the value and cost of EPLI coverage. It is  important to review these exclusions and coverage limitations when evaluating  your policy:

  • You can generally purchase EPLI coverage with limits ranging from  $1 million to $25 million.
  • Most employment practices liability insurance policies include a  deductible. In addition, the cost of legal defense is typically included in the  aggregate insurance limits, along with the costs of judgments and settlements.

Some EPLI policies contain exclusions that limit  coverage during events such as a major work force reduction, acquisition or  merger. Generally, criminal conduct is not covered by EPLI.

This is an ever increasing risk and exposure for business owners.

Call Austin Insurance Group today for a free insurance quote.  Our Hartford Business Owners Policies automatically include this coverage at $10,000, and you can get up to $1,000,000 limit.  Does your policy have it?

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Employment Practices Liability Insurance