Employment-related lawsuits have become more common, making Employment Practices Liability Insurance (EPLI) an essential business safeguard. Even with proper policies, companies can face employee claims regarding wrongful termination, workplace harassment, discrimination, or retaliation. Defending these claims can be costly, so having the right EPLI coverage is crucial.
Understanding how EPLI works and what to consider when selecting a policy helps businesses make informed decisions. Here are five essential factors to keep in mind when purchasing EPLI coverage.
- What EPLI Covers
EPLI protects businesses from claims by employees, former employees, and job applicants. Common claims include wrongful termination, workplace harassment, discrimination, and retaliation. Some policies may also cover wage disputes, defamation, and invasion of privacy. Employee-related lawsuits can arise unexpectedly, making EPLI valuable for businesses of all sizes. Even small companies may face costly legal fees and settlements, so having the right policy provides financial protection.
- What EPLI Does Not Cover
While EPLI covers many employment-related claims, some exclusions apply. Policies do not cover intentional misconduct, criminal acts, or fraud by business owners or employees. Workers’ compensation claims and bodily injury lawsuits also require separate policies. Some policies exclude wage and hour disputes unless additional coverage is purchased. Reviewing exclusions helps businesses understand limitations and adjust policies accordingly.
- The Importance of Policy Limits
Every EPLI policy has coverage limits that determine how much the insurer will pay for legal fees, settlements, and judgments. If a company faces multiple lawsuits, policy limits may not cover all expenses. Larger businesses or those in high-risk industries may need higher limits. Working with an insurance expert ensures businesses choose adequate coverage based on their risks.
- Employee Training and Risk Management Reduce Claims
Insurers consider workplace policies and training when setting EPLI rates. Businesses that provide anti-harassment training, enforce policies, and establish complaint procedures may lower their risk of claims. A structured process for handling complaints also strengthens an EPLI claim defense and may help lower insurance costs over time.
- EPLI Is Not Included in General Liability Insurance
Some business owners assume their general liability insurance covers employment-related claims, but it does not. General liability protects against third-party bodily injury or property damage, not employment disputes. EPLI must be purchased separately or added as an endorsement. Understanding this difference ensures businesses are not exposed to employment-related legal risks. Consulting with an insurance professional helps clarify coverage needs and identify potential gaps.
Get Expert Help in Choosing the Right EPLI Policy
EPLI coverage is key to protecting businesses from costly legal disputes related to employment practices. Reviewing policy details, coverage limits, and risk management strategies helps ensure that businesses are adequately covered.
At ISU Wissink Insurance, we provide businesses with EPLI coverage that fits their needs. Whether you are purchasing coverage for the first time or reviewing an existing policy, we can assist in finding the best options. Contact us today at 310.390.3318 to explore your EPLI coverage choices and ensure your business stays protected.