What is EPLI or Employment Practice Liability Insurance?
EPLI insurance covers a business against claims which arise from employees and third parties alleging that their rights have been violated.
The common allegations which lead to claims include
- Sexual harassment
- Wrongful termination
- Failure to hire
- Failure to promote
- Hostile work environment
- Breach of employment contract
- And more
Are these types of allegations covered by your business owner’s policy or BOP? NO, they are not unless the policy has been endorsed to include some EPLI coverage. I don’t recommend going this route unless you’re a very small business as most business owner’s policy extensions for employment practices are not very broad and the limits are typically low.
So, in most cases, I recommend a standalone policy for employment practices or to combine it with other management exposures such as D&O and fiduciary liability.
Surprisingly 6 out of 10 business owners think their business policy covers EPLI claims – don’t make this mistake!
Why do you need this type of insurance?
The first reason is that there is such a heightened sensitivity among employees and the general public around these types of wrongful acts – especially sexual harassment and the me-too movement.
The second reason is that EPLI related claims can be expensive. According to the EEOC, the average defense costs alone on an employment claim is $125,000 – if your claim goes to trial, the average settlement is around $200,000 in addition to defense costs. That’s expensive.
Lastly, don’t think these claims only happen to big companies – 41% of employee lawsuits are brought against small private companies with less than 100 employees.
What does EPLI insurance cost?
It of course depends on the size of your business, the number of employees, and the controls you have in place but typically in the small business market the premiums range from $800 to $5,000 a year.
Here’s the bottom line. The number of lawsuits against employers alleging wrongful employment acts is increasing and the cost of those suits are skyrocketing. Unless you have specific coverage for employment practices you may be forced to pay claim costs out of pocket. That’s why EPLI is essential for every business regardless of size!
Want to learn more?
Let’s connect. You can call me directly at 845-474-2924 or email me at firstname.lastname@example.org and we can start a conversation. Thanks!