The inception of employment practices liability insurance (EPLI) dates back to the 1990s when the U.S. Senate began delving into sexual harassment during a confirmation hearing. Within five years following that confirmation hearing, EPLI underwriters began focusing more on EPLI than directors and officers underwriting, catapulting the EPLI industry into a competitive market.
EPLI is a business insurance that protects businesses against employee claims that their legal Business Owner’s employment rights were violated by the company. Businesses can obtain two types of EPLI: a Business Owners Policy (BOP) or EPLI as stand-alone coverage.1
EPLI policies usually reimburse the company for the costs of defending a lawsuit in court or for judgments and settlements. Winning or losing a lawsuit doesn’t impact your policy coverage of legal expenses. However, punitive damages or civil or criminal fines are not typically covered by EPLI. Other liabilities, such as workplace condition claims (e.g. injuries, accidents, fatalities), are covered through other insurance policies like workers’ compensation.
Type of Business
Number of Employees
Various Risk Factors, Like Past Employment Practice Lawsuits
The main reason businesses should invest in EPLI coverage is to protect their business from hefty legal expenses that come with defending themselves in a lawsuit brought by an employee. Did you know startups and small businesses are the most vulnerable to liability lawsuits for employment practices? This is because they frequently do not have a legal department or an employee handbook outlining policies and procedures on hiring, disciplining, and terminating employees.
VensureHR has been serving businesses since 2004 with specialized risk, loss control, workers’ compensation, and EPLI to help reduce potential lawsuits and build confidence in overall business compliance. Our HR experts and Legal Department have the resources, tools, and expertise to support you in EPLI-related issues. Whether you’re looking for coverage, have a question regarding an EPLI claim, or want additional resources, our specialists can quickly assist you.
Employment practices liability insurance includes coverage for defense costs and damages related to different employment-related claims including harassment, discrimination, mismanagement of employee benefit plans, wrongful termination and others.
Currently it is not a legal requirement to have an EPLI policy, however, it can save your business money when confronted with employment litigations. One in five businesses with under 500 employees will face employment claims with an average cost of $125,000 to defend.*
Common EPLI claims include hostile work environments; wrongful termination; sexual harassment; discrimination of any kind; negligent or unfair employment practices concerning compensation, promotion, and hiring; retaliation; and breach of employment contacts.
EPLI helps your business cover defense and legal costs and the cost of damages related to any employment claims filed against your business. The policy covers the legal costs irrespective of whether a company wins or loses the lawsuit. It is important to know that liabilities covered by other insurance policies such as workers’ compensation are excluded from EPLI policies.
When determining the coverage amount, insurance companies will consider the number of employees, company revenue, industry, hiring and termination practices, employee turnover rate, risk profile, and past EPLI claims history.
EPLI excludes liabilities covered by other insurances. Businesses cannot use EPLI for general, professional, workers’ compensation, or other insurance claims. Most policies will have exclusions like violations of National Labor Relations Act, the Worker Adjustment and Retraining Notification Act, Occupational Safety and Health Act (OSHA), and the Employee Retirement Income Security Act (ERISA)
It is a good idea to receive quotes from multiple providers to determine the best one for your business. You may also want to find a provider that works with other businesses in your industry because they will be more familiar with the types of employment risks your company faces.
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