Employment Practices Liability Insurance - EPLI Coverage

Employment Practices Liability Insurance
by Arthur Williamson

When running a business, you will likely make plenty of decisions that will affect your employees. While certain processes may be in place to provide transparency, some employees may not see it as such. For this reason, employment practices liability insurance may be worth considering to protect your company from potential lawsuits.

Keep reading to learn more about employment practices liability insurance and if it’s right for your business.

What is Employment Practices Liability Insurance?

Employment practices liability insurance covers companies against claims by employees of their rights as workers of the firm are violated. Employment practices liability insurance offers coverage to companies against claims made by employees alleging:

  • Discrimination (based on sex, race, age, or disability)
  • Wrongful termination
  • Harassment
  • Other employment-related issues, such as failure to promote

Large corporations typically have substantial employment practices insurance policy in the area and are ready to deal with pretty much any occupational lawsuit.

New or small companies, however, are frequently the most vulnerable to employment lawsuits. That is because they generally lack a legal section or employee handbook outlining the policies and processes that lead hiring, disciplining, or terminating employees.

The number of suits filed by workers against their companies has been climbing. When most lawsuits are filed from big businesses, no business is immune to such suits. Smaller businesses today must recognize that need as a reason for acquiring employment practices liability insurance.

When Does a Small Business Need Employment Practices Liability Insurance?

Even though It's not a legal necessity for a business to have employment practices liability insurance, it could be a good idea given the increasing volume and prices of employment practices lawsuits.

For small and midsize companies, the costs of protecting employment claims could be cost-prohibitive. Even if the allegations from the employer don’t have any merit, protection expenses, along with verdicts and settlements, can frequently reach seven or six figures.

Small companies may be particularly at risk of employment-related suits since they have a bigger team with limited or no HR department or counselor to turn to for help with thorny employment problems. It is also possible they don't have detailed records of worker performance.

Nobody ever expects a worker to come after their small business, but it is essential to be ready nonetheless. There are many reasons that a worker could bring a suit against your enterprise, and lawsuits could be financially draining for companies big and small.

What Does Employment Practices Liability Insurance Cover?

Employment practices liability insurance coverage may vary between providers, but typically covers the following types of claims:

  • Wrongful termination
  • Discrimination
  • Harassment (including sexual harassment)
  • Retaliation

Employment practices liability insurance policies may protect additional employment-related claims, such as breach of employment contracts, defamation, and invasion of privacy. Employment practices liability insurance policies generally exclude from coverage claims of bodily injury and property damage, contract-based claims, as well as claims under the following:

  • Fair Labor Standards Act (FLSA) and comparable state wage and hour laws
  • National Labor Relations Act (NLRA)
  • Worker Adjustment and Retraining Notification Act (WARN)
  • Occupational Safety and Health Act (OSHA)
  • Consolidated Omnibus Budget Reconciliation Act (COBRA)
  • State unemployment insurance
  • Workers’ compensation statutes

Can Employment Practices Liability Insurance Cover Claims Related to the Coronavirus (COVID-19)?

Firms forced to lay off employees because of the coronavirus must prepare for possible wrongful termination suits. Employment practices liability insurance may likely offer coverage if workers sue because they have been fired for failing to meet work duties because of COVID-19. Check with your insurer's claims department to discover when you're insured.

How Much Does Employment Practices Liability Insurance Cost?

Employment practices liability insurance prices typically vary between $800 and $5,000 in yearly premiums. However, a lot of small businesses can find a policy for approximately $1,200 each year.

Some insurers provide employment practices liability insurance exemptions and the company owners may increase their own company owner's coverage that begins around $300 each year.

The price of an employment practices liability insurance policy Is dependent upon your type of business, the number of employees you have employed, and different risk factors like if your business was sued over previous employment practices. The policies may reimburse your business against the costs of defending a lawsuit in court and also for decisions and settlements.

Employment practices liability insurance policies also cover legal expenses if your company wins or loses the suit. However, policies typically don't cover punitive damages or criminal or civil penalties. Liabilities covered by other insurance coverages, such as workers' compensation, are excluded from Employment practices liability insurance policies.

What Are the Policy Limits and Deductibles for Employment Practices Liability Insurance?

Most employment practices liability insurance policies are supplied on a “claims-made" basis, meaning that claims will likely be covered when any claims associated with it occur.

You can select how much protection you want. Settlements, decisions, and legal protection costs are generally contained in aggregate limitations. Some policies have limits on claims associated with immigration.

Most employment practices liability insurance policies comprise a deductible, which can be an amount that you pay out of pocket before legal costs before an insurance company contributes. Some policies limit coverage through acquisitions or significant staff reductions. Employment dispute suits can be costly, so bear this in mind when picking an employment practices liability insurance policy.

Be aware that legal penalties can compose a considerable part of employment practices liability insurance advantages. If your business prefers to utilize particular lawyers, you need to ensure the coverage you have lets you do so. Additionally, several policies might be amended to allow this.

Tips for Saving Money on Employment Practices Liability Insurance

Pay Your Premium Upfront

You can generally cover your premium monthly or yearly installments. It may be tempting to go for a smaller monthly fee, but think about paying the full premium instead. Firms can generally save money this way because most insurers provide discounts on yearly premiums.

Manage Your Risks

If your company does not have any claims history, then you can expect to pay reduced insurance prices.

An excellent method to do so is to produce a detailed risk management program. For Instance, you may consider providing harassment prevention training, invest in a human resources department, or form internal protocols for hiring and firing employees.

Bundle Your Coverage

A cheaper route is to obtain a business owner's policy. This provides protection from significant liability and property risks into a single bundle.

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Assured Standard will protect your business with the right insurance, depending on your needs. Now more than ever, it’s crucial to have the right general liability insurance experts on your side. Protecting the future of your business starts today.
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