Employment practices liability insurance, also known as EPLI insurance, protects employers from lawsuits brought by employees. It provides coverage for many situations that general liability insurance doesn't. Even lawsuits that are won by your company can be expensive due to the high cost of legal defense. EPLI coverage provides important financial protection for your business, and it's a critical policy for businesses of all sizes.
Workplace liability coverage can protect your business against various lawsuits, ranging from harassment to discrimination. These types of claims are becoming more common as time goes on. Fortunately, an independent insurance agent can easily help you find the appropriate employment claims insurance or EPLI coverage for your unique business's needs. But first, here's a closer look at EPLI insurance, what it covers, and why it's necessary.
Key Takeaways - Employment Practices Liability Insurance
- Employment practices liability insurance (EPLI) protects businesses against employee lawsuits for claims of wrongful termination, sexual harassment, discrimination, and more.
- Without EPLI coverage, a business would have to pay out of pocket to defend and settle employee lawsuits for related claims.
- EPLI insurance costs an average of $222 per month or $2,664 per year for small businesses, but costs can vary by business size, location, industry, and other factors.
- It's strongly recommended to work with an independent insurance agent, as they can customize an EPLI policy to meet your unique business's needs.
What Is Employment Practices Liability Insurance?
Employment practices liability insurance is a type of business insurance designed to protect a company from the cost of employee lawsuits for many different types of claims, including discrimination, harassment, and wrongful termination.
EPLI definition
The primary purpose of EPLI coverage is to provide employment lawsuit protection for a business. Without this coverage, your business could have to pay tens of thousands of dollars or even more to defend and settle an employee lawsuit, even if the claim turns out to be unfounded.
What Does Employment Practices Liability Insurance Cover?
EPLI insurance provides employment lawsuit coverage that can pay for your business's legal defense costs if an employee sues you. Your business may not be able to sustain a lengthy legal battle without the proper coverage. EPLI helps pay for court, settlement, and defense costs.
EPLI coverage can be purchased as a standalone policy, but can also be found within a management liability insurance package. These packages combine EPLI coverage with directors and officers liability and fiduciary liability insurance.
Standalone EPLI provides coverage for legal expenses arising from the following claims:
- Sexual harassment
- Wrongful termination
- Breach of an employment contract
- Discrimination
- Negligent HR decisions
- Inaccurate employee evaluations
- Violation of local and federal employment laws
- Infliction of emotional distress or mental anguish
- Failure to hire or promote
- Wrongful discipline or demotion
- Mismanagement of employee benefits
- Defamation of character
- Privacy violations
- Deprivation of career opportunity
An independent insurance agent can further explain the coverage provided by EPLI employee claims insurance policies in your area.
Who Needs Employment Practices Liability Insurance?
Virtually any business with employees is vulnerable to lawsuits for various claims and can benefit from having EPLI coverage. Though coverage may not be required by law, it's very important to have it, especially if your business does any of the following:
- Hires employees
- Performs evaluations for its employees
- Promotes or fires employees
- Distributes information about its employees
- Allows employee interaction with coworkers, customers, or other third parties
- Provides employee benefits
Your business can be sued by its employees for any of these routine operations. Having coverage can be just as critical for small businesses as it is for large corporations, depending on your company's operations.
However, some of the most at-risk industries are tech, retail, and healthcare. An independent insurance agent can provide you with even more examples of why having business liability insurance for employees can be well worth the cost of the coverage.
Who Sells Employment Practices Liability Insurance?
Employment practices liability insurance is available from many different insurance companies, and the best way to find the right carrier for you is through working with an independent insurance agent. Independent insurance agents know which insurance companies to recommend to meet your needs, and can provide informed suggestions based on company reliability, rates, and more.
While many insurance companies could provide employment practices liability insurance for you, finding coverage could also depend on the area you live in. Here are a few of our top picks for employment practices liability insurance.
| Top EPLI Insurance Companies | Overall Carrier Star Rating |
|---|---|
| Nationwide |
|
| Travelers |
|
| The Hartford |
|
| Acuity |
|
| Allstate |
|
What EPLI Does Not Cover
Though employment practices liability insurance provides critical protection for businesses everywhere, it can’t cover everything. These are a few of the most common EPLI exclusions:
- Data breaches
- Criminal fines
- Unpaid employee wages
- Bodily injury
- Intentional or malicious acts
- Unemployment benefits
- Workers' comp incidents
- Property damage
If you have further questions about which exclusions apply to your specific EPLI policy, an independent insurance agent can help you review your coverage.
Who Is Covered by Employment Practices Liability Insurance?
Your employees are covered against various claims under EPLI, along with the business owner, directors, officers, and management staff. You may also be protected against claims filed by third parties.
Your business needs to be equipped with this critical coverage before it ever opens its doors. Having the proper protection can mean the difference between success and failure.
How Much Does Employment Practices Liability Insurance Cost?
EPLI costs an average of $222 per month for small businesses, or about $2,664 per year. However, your business's EPLI insurance costs can vary depending on many different factors, such as your location, company size, and industry.
Like any other business insurance, pricing is customized to your policy's specifics. Employment practices liability premiums are often rated on the following factors:
- Your experience level
- The safety practices you have in place
- If you have a human resources department
- How you deal with hiring
- How you deal with termination
- Prior claims reported
- Number of employees
- Coverage limits
An independent insurance agent can provide you with exact quotes for affordable employment liability insurance in your area. They can also help you implement cost-saving strategies to reduce your EPLI premium rates as much as possible.
What Are the Limits on an EPLI Policy?
Typically, EPLI coverage comes with limits ranging from $1 million to $25 million. It's important to work together with an independent insurance agent to choose the right amount of coverage for your business to cover possible attorney, court, and settlement costs in the event of a lawsuit.
EPLI insurance often works on a claims-made basis, which means that coverage kicks in when the following criteria are both met:
- The incident the employee claims occurred when the policy was active
- Charges are pressed against the business for the claim while the policy is active
An independent insurance agent can further help you understand the coverage limits and terms under EPLI.
What to Look for in an EPLI Policy
You'll need to assess your business's risk level when choosing the right EPLI policy. It's also helpful to compare coverage limits and exclusions from several different policies before making your choice.
To find the best coverage for your business, work with an independent insurance agent to select an EPLI policy with the following protections:
- Sexual harassment
- Retaliation
- Defamation
- Mismanagement of employee benefits
- Failure to promote
- Mental or emotional distress
- Invasion of privacy
- Discrimination
- Negligent evaluation or supervision
- Wrongful demotion, termination, or disciplining of an employee
Your independent insurance agent can help you select the best EPLI insurance for your unique business. They'll help you perform an EPLI policy comparison before choosing the employment liability insurance that works best.
The Benefits of Employment Practices Liability Insurance
There are several benefits of having employment lawsuit protection for your company, including better business risk management. EPLI coverage provides financial protection against lawsuits filed by employees, which greatly reduces your business's risk of hefty losses. Providing this coverage can also help protect your company's reputation.
The Benefits of an Independent Insurance Agent
Having EPLI coverage for your business is essential for risk management and to protect against large financial losses. Evaluate your business's EPLI coverage needs when you're ready to get a policy.
And when you're ready to find the absolute best employment practices liability coverage, no one’s better equipped to help than an independent insurance agent. Independent insurance agents search through multiple carriers to find providers who sell EPLI insurance coverage, deliver quotes from a number of different sources, and help you walk through them all to find the best blend of coverage and cost.
FAQs About Employment Practices Liability Insurance
How much EPLI coverage do I need?
To determine how much EPLI coverage your business needs, you'll need to work with an independent insurance agent. Together, you'll discuss your business's operations and risks, and from there, be able to pinpoint the exact amount of coverage necessary to protect you.
What is the difference between employment practices liability and employers liability?
Employers liability insurance is similar to EPLI, but its scope is more limited. This coverage protects businesses against employee claims of injury or illness that stemmed from the business's negligence. Employer's liability insurance also covers legal fees, such as attorney, court, and settlement costs.
What is employment practices liability insurance coverage and why is it important?
EPLI insurance protects employers from lawsuits brought by employees. It provides coverage for many situations that general liability insurance doesn't, such as harassment or wrongful termination. EPLI coverage provides important financial protection for your business against costly (and frequent) employee lawsuits.
What does an EPLI policy cover? Does it cover all employee claims?
EPLI protects your business from numerous employee lawsuits for claims of sexual harassment, wrongful termination, breach of contract, discrimination, failure to promote, invasion of privacy, and much more. It won't cover employee claims of work-related injuries or illnesses, which fall under workers' comp.
How much does EPLI cost for small businesses?
Small businesses pay an average of $222 per month or about $2,664 per year for EPLI coverage. The cost of your policy can vary depending on your location, industry, and other factors.
Can startups get EPLI coverage?
Yes, startups can get EPLI coverage. This coverage can be essential for startups because their risk of employee lawsuits only grows as the company develops and hires more workers.
Is EPLI required by law?
EPLI isn't typically required by law, but it's still an essential coverage to have for your business's financial protection. Still, it's always a good idea to check with your local requirements to be certain.
How does EPLI differ from general liability insurance?
EPLI covers employee claims of wrongful termination, sexual harassment, and more. General liability insurance covers third-party claims of bodily injury or personal property damage, such as if a customer slips and falls on your business's wet floor.
What should I look for when choosing an EPLI policy?
You'll want to look for an EPLI policy that includes high enough coverage limits for employee lawsuits related to wrongful termination, sexual harassment, discrimination, etc. Working with an independent insurance agent is a great way to find the best EPLI policy for your business.
Sources
https://www.thehartford.com/employment-practices-insurance
https://www.iii.org/article/what-employment-practices-liability-insurance-epli
https://www.irmi.com/term/insurance-definitions/employment-practices-liability-insurance
https://www.insureon.com/small-business-insurance/employment-practices-liability/cost
