Employment Practice Liability Insurance
Often referred to as EPLI is a form of Management Liability protection and can be made part of a management liability portfolio policy, including D&O and other coverage parts; or can be written on a sand-alone policy form. This coverage form protects the company leaders and decision makers from allegations of wrongful acts with regard to employment decisions. Common allegations are failure to hire, failure to promote, discrimination, harassment, sexual harassment, racial profiling, discrimination,etc. Employment Practice Liability Insurance should be a coverage consideration for EVERY business, large and small due to the prevalence of employment lawsuits, and their potential magnitude.
The first line of defense to these sorts of claims is a solid Human Resources department or HR Risk Management Strategy such as a current, well written employee handbook, and good HR Practices. But, that will not always prevent claims from being made. The unfortunate thing about employment claims is that a true misunderstanding can blow up into a large claim that damages the company’s reputation and viability, while disrupting the workforce and morale of a company.
What Limitations Exist with EPLI Coverage?
Like other management liability claims, EPLI claims are generally not covered by other forms of business insurance such as your general liability or umbrella liability. Some insurers in recent years have added some EPLI coverage to their BOP or Package policies, but be aware that the coverage grant to these endorsements can be limited, and the limits of coverage can be relatively small. While it may be better than no coverage at all, we highly recommend evaluating the coverage form carefully for terms, conditions and limitations that can be found in these endorsements.
Employment Practice / EPLI coverage is written on a claims-made policy form and like other Management Forms like D & O, it takes a seasoned adviser to properly structure and negotiate policy terms appropriately to avoid potential pitfalls and gaps in coverage.
For more information about Employment Practices Liability Insurance, please contact us!