Employment Practices
Liability Insurance (EPLI)
What is employment practices liability insurance?
Employment Practices Liability Insurance (EPLI) provides coverage for claims made by employees alleging wrongful acts in the workplace.
This may include allegations such as:
Improper hiring practices
Improper firing practices
Discrimination based on sex, age, race, disability, etc.
Claims can arise from issues like sexual harassment, wrongful termination, or failure to hire or promote an individual.
Do I need it?
If your business involves hiring and firing employees, promoting or demoting staff, or providing raises, then you need Employment Practices Liability Insurance (EPLI) coverage.
What does it cover?
EPLI policies typically cover costs related to:
Legal fees for defending your company
Judgments or settlements if your business is found liable
Can I get a claims example?
Wrongful Termination Sample Claim: You decide to let go of an employee who has been underperforming and not meeting sales quotas. A few months later, you receive legal papers for wrongful termination based on age discrimination. Despite the claims being unfounded, a lack of adequate documentation proving his poor performance leads to a settlement of $630,000.
Racial Discrimination Sample Claim: An employee refuses service to a woman of another ethnicity and uses racial slurs. Although this behavior goes against your training, several witnesses confirm the incident. The victim sues your restaurant for racial discrimination, resulting in a settlement of $48,000.
Gender Discrimination Sample Claim: A former employee claims gender discrimination, alleging that her male colleagues received raises while she was passed over for a promotion due to her gender. The defense costs alone amount to over $100,000.
These examples illustrate that even with the necessary controls in place, EPLI claims can arise and result in significant costs.
Things to note
Cost Considerations: EPLI can be costly, with premiums sometimes matching or exceeding those of your Business Owners Insurance policy (BOP). We’ll work with your budget to find the right fit.
Preparation for Application: When ready to apply for EPLI, have your financials and employment handbook prepared in advance, as many carriers require these documents at the time of application.
Coverage Options: EPLI coverage may be available as an add-on to your Business Owners Insurance policy, depending on your carrier. However, this is typically limited to first-party EPLI claims. Standalone EPLI policies often provide broader coverage, including both first- and third-party claims.