What Is EPLI Insurance Coverage?
Employment Practices Liability Insurance (EPLI) protects your business from employment-related lawsuits and claims and is a stand-alone business insurance policy or the coverage can be added to your business owners policy (BOP). EPLI includes coverage for damages that can arise from employment-related claims, including wrongful termination, discrimination, harassment, and retaliation.
Even with a solid HR department, we recommend EPLI coverage for most companies as employment-related lawsuits and claims are rising. Even smaller frivolous lawsuits cost significant amounts of money and time.
EPLI Coverage Vs. Workers Compensation (Workers Comp)
EPLI and workers compensation insurance coverage protects businesses, employers, and employees very differently:
EPLI protects the business and employer from lawsuits and claims against the employer for discrimination, wrongful termination, sexual harassment, and retaliation.
Workers compensation insurance coverage, also known as workers comp, protects both the business owner and employees from the expense of on-the-job injuries or illness. The coverage provides injured employees with lost wages and medical care they need regardless of fault. Additionally, the business owner is protected against employee lawsuits over on-the-job injuries, illness, and claims. Therefore, most states require businesses to provide workers compensation coverage.
Why Do I Need EPLI Insurance Coverage?
Every day the unforeseen happens, and you should review your risk management strategies to ensure you have sufficient protection. In addition, employment practice claims and lawsuits have increased due to the legal environment, economy, and demographics. EPLI coverage helps protect your business and bottom line by protecting you from lawsuits that may arise from employees for violating their legal employment rights.
Additionally, The number of harassment claims has increased in number and severity in recent years along with the rise of social media. This has led to the number of employers being sued increasing in recent years.
How Much EPLI Insurance Coverage Do I Need?
Employment practices liability insurance (EPLI) protects businesses and organizations from claims made by employees related to discrimination, harassment, wrongful termination, and other employment-related issues. The amount of coverage you need will depend on several factors, including the size of your business, the number of employees you have, and the specific risks your business faces.
A Business Owners Policy (BOP) can provide limited EPLI coverage, but the limits are insufficient for most businesses- only up to $100,000. This limit may be suitable for small businesses. However, based on your business needs, we often recommend getting higher coverage limits under a separate policy. The most common EPLI coverage limits that are offered are:
To determine the right amount of coverage for you and your business, we consider the following:
Size of the business
Location of the business
Hiring and firing procedures
It's important to carefully assess your business's needs and consult an insurance advisor who can help you determine the right coverage for your specific situation. Generally, it is recommended to carry enough coverage to protect your business's assets, including its property, equipment, and financial resources.
EPLI Insurance Claim Examples:
Employment practices liability insurance (EPLI) covers a wide range of employment-related claims, including claims of discrimination, harassment, wrongful termination, and other workplace issues. Some examples of claims that might be covered by EPLI include:
An employee has a seizure while working at a restaurant. Before the seizure occurred, the owner intended to fire the employee for poor performance. After the employee was fired, they sued the employer for failure to accommodate their medical condition.
An employee who claims that they were passed over for a promotion because of their race, gender, or other protected characteristic
An employee who alleges that they were sexually harassed by a co-worker or supervisor
An employee who claims that they were wrongfully terminated because of their age, disability, or other protected characteristic
An employee who alleges that they were retaliated against for reporting discrimination or harassment to management
Whistleblower employees who feel they are the victims of harassment or discrimination voice their thoughts at work and are punished in some way by upper management. Or an employee's pay was cut or demoted and retaliate against the employer as they believe it has nothing to do with their performance.
An employee who claims that they were not paid overtime or were otherwise not paid in accordance with labor laws
These are just a few examples of the types of claims that might be covered by EPLI. It's important to keep in mind that EPLI policies may vary, so it's always a good idea to carefully review your policy and consult with your insurance provider to determine what is and is not covered.
Is EPLI Insurance Coverage Mandatory?
Employment Practices Liability Insurance (EPLI) is not typically required by law, but it can be a valuable tool for businesses to protect against potential claims related to employment practices. EPLI can cover various employment-related issues, such as discrimination, harassment, wrongful termination, and more.
While EPLI is not mandatory, it is something that many businesses choose to purchase to protect against potential legal liabilities and financial losses. In some cases, businesses may require EPLI coverage as a condition of contracting with certain clients or customers.
Additionally, we recommend that EPLI coverage either be added to an existing business insurance policy or a separate policy to protect the business from employment-related lawsuits or claims.
If you are considering purchasing EPLI coverage for your business, it is important to carefully review your needs and the terms of the coverage to make sure it is the right fit for your business. An insurance agent or broker, such as the Overmyer Insurance Agency, can help you understand your options and determine whether EPLI coverage is necessary for your business.
EPLI Insurance Cost
Generally, the cost of EPLI insurance coverage will cost about $300 if added to your business owner's policy or up to $800 - $3000 if EPLI is purchased on a stand-alone policy. The cost of EPLI coverage is based on several factors, this includes:
Size of the business
Number of full and part-time employees
Hiring and firing standards
The industry your business is in
The Bottom Line:
Employment lawsuits are on the rise, and it is recommended all businesses carry EPLI coverage to protect their company from discrimination, harassment, wrongful termination, and many more employment lawsuits and claims.
80% of businesses are paying too much for insufficient insurance coverage, we solve this by partnering you with the right insurance company and coverage. The Overmyer Insurance Agency helps businesses make better decisions when it comes to their insurance needs. If you would like to get an EPLI quote or want a coverage review, we are here to help, and just a call or click away.