Employment practices liability insurance, or EPLI as it is commonly known, is not one of the most common business insurance policies on the market. In fact, recent statistics show that only 3% of small businesses with fewer than 50 employees have this form of coverage. However, it is one of the most important insurance policies a business owner could take out to protect his or her business from ruin.
What Does EPLI Insurance Cover?
EPLI insurance covers claims made by one or more employees against a business. These include discrimination, sexual harassment, defamation, invasion of privacy, failure to promote, breach of contract, deprivation of a career opportunity, retaliation, wrongful termination, and failure to accommodate an employee’s pregnancy or lactation-related needs. It can also cover claims related to the mismanagement of employee benefit plans. In some instances, even freelance workers or gig workers can file a claim against a business. Job applicants can also file a claim if they feel they have been discriminated against during the hiring process.
Generally speaking, an EPLI insurance policy will cover both an out-of-court settlement and the cost of hiring a defense lawyer. However, not all policies provide both forms of coverage. Some will limit the amount of money that can be spent on hiring a defense attorney or even fail to provide funding to hire an attorney should the case go to court. A policy may also put limitations on how much money will be provided to settle a claim out of court.
Some business owners may feel that good management would prevent the behavior outlined above and thus render the need for EPLI coverage moot. However, the truth is that even business owners with high standards of integrity need EPLI coverage. Any employee who feels that he or she didn’t receive a deserved assignment or promotion can take the business to court and claim compensation even if a business owner had a valid reason for denying a promotion or career advancement opportunity. An employee who is harassed by another employee could claim that the business owner is at fault because the owner hired the perpetrator in the first place. These are just two of many examples of lawsuits a business owner could face if an employee feels he or she has been wronged while at work.
What Isn’t Covered By EPLI Insurance?
An EPLI policy provides coverage for many different types of claims. However, there are also quite a few claims that don’t receive coverage. These include claims related to checking an employee’s immigrant status (if he or she is not an American citizen) and claims related to wages and working hours. Employment practices liability insurance also doesn’t cover claims made against a particular individual in the company. Large companies that are concerned about a director, officer, supervisor, or executive being sued by name should consider obtaining directors and officers liability insurance.
EPLI insurance also doesn’t cover illness, on-the-job injuries, claims related to union disputes, or unemployment insurance claims. Professional errors are likewise not covered under this policy. For instance, if a company employee failed to follow corporate cybersecurity guidelines and an employee’s personal data was leaked online as a result, the resulting claim would be covered under professional liability insurance. Additionally, EPLI policies don’t provide compensation for criminal fines or cases involving bodily injury, theft, or the destruction of property.
How to Choose the Right EPLI Policy
There are many factors to take into account when choosing an EPLI policy. The type and amount of coverage provided by the policy are very important. A good policy will cover all situations related to a company’s standard operations. It will also cover not only the cost of a settlement but also the cost of hiring a defense lawyer if settlement talks don’t work out.
A business owner will also want to ensure the policy provides new forms of coverage as needed. Some states have made new laws regarding the type of questions one can ask an employee or job candidate. Furthermore, behaviors that were acceptable even a few years ago would be ground for a claim today. The best policies will stay in step with the times to ensure a business has ample coverage both now and in the future.
Grand Mutual Insurance Services offers employment practices liability insurance along with the other insurance policies a business owner needs to run a successful business. This policy can be purchased as part of a comprehensive business insurance policy or as a stand-alone policy. What’s more, Grand Mutual has a track record for providing top-tier customer service to businesses of all sizes and industries to ensure a business owner has the professional help and assistance he or she needs as soon as a claim is filed against the business. Get in touch to learn more about coverage options or to start the process of purchasing an EPLI policy designed to suit your exact needs.
