Employment Practices Liability Insurance

Employment practices liability insurance frequently referred to as EPL or EPLI insurance, provides specialized business insurance coverage for employers to protect against claims made by employees for things like:

• Discrimination (based on sex, race, age, or disability)
• Wrongful termination
• Harassment (including sexual harassment)
• Other employment-related issues, such as failure to promote

If you have employees, you likely need employment practices liability insurance. For some employers, there is a feeling that an employment practices claim simply won’t happen in their business … think again. EPLI claims happen in businesses of all sizes, industries, or management philosophies. These types of claims are highly disruptive and can damage reputations and hurt employee morale. Not to mention, they’re costly to defend.

For small businesses with employees, EPLI provides coverage when an employee sues the employer over matters related to their employment. For covered claims, the employer can rely on this coverage to provide for legal costs and claims payments when an employee has a valid claim.

Like professional liability insurance, employment practices liability insurance is usually offered on a claims-made basis. What does this mean? When a policy is issued on a claims-made basis, it means the act which results in a covered claim being reported when coverage is active, and you would have had to have coverage at the time when the act occurred.

What does this mean for the employer?

Because an EPLI claim frequently arises months, even years after the alleged incident, your company might be vulnerable if your insurance coverage was dropped or if tail coverage (liability insurance that extends beyond the end of the policy period) wasn’t purchased.

The way you purchase EPLI coverage can impact the premium and coverage you receive. If you have a small business, you may be able to buy employment practices liability insurance as an endorsement to a business owner’s policy or a monoline general liability policy. For larger businesses or companies with more employees, a stand-alone policy may be written as part of a package, or along with your BOP.