EPLI has been receiving a lot of attention lately – and for good reason. You might be wondering, “What is EPLI?”
As indicated by its name – Employment Practices Liability Insurance (EPLI) covers claims arising out of a host of wrongful employment practices.
Why EPLI is so relevant
Although you may be the best employer, all it takes is one disgruntled employee or ex-employee to sue in retaliation for a perceived slight. Even if he or she makes completely false allegations, you will still need to defend yourself in court.
Types of coverage typically available
Types of covered claims can include the following: (Note: Not all policies will cover all types of claims listed.)
- Wrongful termination
- Violation of employee privacy rights
- Pregnancy discrimination
- Genetic discrimination
- Illegal background checks
- Retaliation
- Racial discrimination
- Disability
- Age discrimination
- Religion
- Wage / hour violations
- Equal pay
- Unpaid interns
- Sexual harassment
- Immigration law violations
- Biometric privacy
Significant stats
According to an Advisen study, only 12% of US businesses are protected. *
General liability insurance does not include protection from these types of claims.
EPLI coverage is available either as a separate policy, as an add-on to a package policy or bundled together with related coverages in a management liability policy.
It may be tempting to forego EPLI, but some statistics from a Hiscox study may compel you to feel otherwise.
- Average defense costs – $125,000
- Median judgment for cases that go to trial: approximately $200,000
- Twenty-five percent of all cases resulted in a judgment of $500,000 or more
States with the toughest anti-discrimination laws and other employee-related laws are more likely to experience claims.
According to Advisen, the top four employment practices litigation generating states, are:
- New York
- California
- Texas
- Florida
Not all policies are created equal
It is useful to note some items where insurers may differ on what is included in coverage. Every business is different and will have its own considerations in determining appropriate coverage. Since there can be significant differences between policies, be sure to discuss your needs with a qualified insurance professional.
The most basic variables are limits, sub-limits for various specific types of claims and deductibles. There are a lot of other important differences between policies. While some insurers may offer any of the following for additional premiums, some may not offer them at all. The following is not a comprehensive list and it is important to bear in mind as well that insurers are constantly updating the coverage that they offer.
- Separate defense cost limits in addition to the regular policy limits
- Punitive damages
- Third party coverage (see explanation below)
- Wage & hour violations coverage exclusions or sublimits
- Employee privacy infringement
- Additional services and HR resources, claims prevention, legal advice
- Prior acts
- Workplace violence
Third party EPLI extends coverage to non-employees such as customers and is most useful for businesses with a high patron exposure such as restaurants, apartment building owners and other similar businesses.
Premiums: What to expect
EPLI premiums are less than you’d think. Your premiums will vary depending on location, the number of employees, past EPLI type negative history (even if no prior coverage), the nature of the business, claims prevention measures implemented and other factors.
Questions and comments are welcome. Please either leave them in the comments section below or you may contact me directly.
*The Advisen study only focused on stand alone EPLI policies. It did not include EPLI coverage that was included as part of a package with another type of coverage.
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