Costs of EPLI or Employment Practice Liability Insurance
Hi, I’m Gordon Coyle and in this video and post, we’re going to look at the costs of EPLI or Employment Practice Liability Insurance – how premiums are determined, what you can do about costs, what’s covered, and how you can get this important form of insurance.
Let’s start off with a quick primer on what EPLI or employment practice liability insurance is – a more detailed video on that can be found here: What is EPLI or Employment Practice Liability Insurance?
In a nutshell EPLI is a form of business insurance intended to protect a founder, entrepreneur, decision maker or company leader from claims alleging a wrongful employment act.
These can be acts such as harassment, wrongful termination, discrimination, retaliation, hostile work environment and more. It can also include claims of this nature from non-employees or other third parties.
EPLI insurance pays for defense costs and ultimate settlements – both of which can be very expensive – for employment related claims.
It’s important to know that Employment related claims are excluded from a business’s general liability, umbrella and other business owner policies. Without specific EPLI coverage these claims are paid out of pocket by the company.
Finally, just because you haven’t had a claim in the past doesn’t mean you won’t have one in the future – employment claims are pervasive and can be brought by even the happiest employees.
There are several underwriting factors that determine the premium you’ll pay for EPLI coverage, including:
- Industry. Some industries have higher rates than others for EPLI. Restaurants, law firms, manufacturers, and retail firms have a higher incidence of EPLI claims therefore they pay higher premiums than industries where the claims are lower.
- Company Size – The number of employees will have a big impact on the premium. This stands to reason, the greater the number of employees the greater the risk of an employment suit. Company revenues and payrolls are also used in rating EPLI policies.
- Claim history – companies with prior EPLI claims, whether they were insured or not will pay higher costs than similar employers with no prior EPLI claims.
- Limits of insurance – the higher the limits will of course drive the costs higher – we recommend that for most small and medium sized businesses the starting point for limits should be $1 million, but also look at higher limit options to find what fits your budget.
- HR practices – in most cases, an employer must have some cursory HR practices in place in order to qualify for EPLI coverage. The better documented your HR practices are, may qualify for rating credits and lower your costs.
- Turnover – firms with high turnover rates indicate a greater potential for employment claims stemming from wrongful termination allegations, so cost will be higher in these situations.
- Geography – there are certain areas of the country where litigation costs and the incident of claims are higher, like New York City and the rates for firms there are higher than say a more rural area or even suburban area.
Okay so you’re probably saying –
SO WHAT’S IT GOING TO COST? GET TO THE POINT.
I know you are searching around for premiums or a general idea of cost and yes there are some websites that will say that the average premium for a small business is around $1,500 a year or the cost per employee ranges from $60 to $90 per year, but I’m not sure that’s a great way to go about this because there are so many variables in pricing a policy.
Look, I’d hate to say here that the average small business pay’s less than $2,000 a year and then you contact me and it’s actually $4,500! That doesn’t feel right.
But, I will tell you that in many circumstances we can get you a rough ball park of what your costs would be with a minimal amount of data.
No need to complete a long application – let’s have a quick conversation I’ll ask you those 5 or 6 questions and then can get back to you with some ideas of pricing.
If what I come back with sounds good we can take the next step and customize the plan a bit further.
And here’s another point – I’m not a high pressure sort of salesperson – I’ll go at your pace and not harass you if you don’t want to buy the policy, I’ll answer the questions you have and work with you so you’re satisfied.
If that sounds like the kind of insurance broker relationship you’re looking for, then let’s connect.