Employment Liability Coverage
Safeguarding your business is crucial. You know the importance of liability insurance to protect your organization from the risk of third-party lawsuits. But how do you protect your business from lawsuits that come from within?
Employment practices liability insurance, or EPLI, is designed to protect your organization from lawsuits brought on by current, former, or even prospective employees. EPLI coverage protects your business from employee-initiated lawsuits, including allegations of harassment, discrimination, and wrongful termination.
What Employment Liability Insurance Covers
EPLI commonly covers claims such as:
- Discrimination based on gender, religion, age, race, or other factors
- Wrongful termination
- Breach of employment contracts
- Invasion of privacy
- Violation of leave laws
- Emotional or mental distress
- Slander or libel
- Failure to promote
- Deprivation of a career opportunity
- Wrongful demotion or discipline
Employee allegations can be hard to prove in court and businesses often settle when their is a claim of employer misconduct. These settlement claims can cost an organization millions.
EPLI can safeguard your business against the high cost of defense and settlements in the event of a claim.
How EPLI Works
Employment practices liability insurance protects your business, its managers, employees, officers, and directors in the event of an employee-related misconduct claim.
What EPLI Covers
If an employee or group of employees alleges wrongful acts arising from the employment process, EPLI covers expenses involved in defending against claims or lawsuits, regardless of the outcome. That includes:
- Settlements and judgements
- Back pay/ front pay awards
- Attorney’s fees and costs
- Defense expenses
Employment liability policies are typically written on a claims-made basis, which protects your business from claims made while the policy is in force. This typically includes acts committed prior to the claims-made policy period, known as “prior acts coverage.”
Less common is an occurrence policy, which protects your business from any claims made during the policy period, regardless of when the claim is reported.
What EPLI Doesn’t Cover
EPLI covers employers against claims made by workers who have sued the company for violating their legal rights as employees. It does not cover claims covered by other types of commercial insurance, such as bodily injury, property damage, as well as intentional and/ or dishonest acts.
EPLI policies do not usually cover criminal fines, civil fines, penalties or punitive damages. Most policies do cover claims for emotional distress or mental anguish associated with covered losses.
Employee-related lawsuits can be difficult to manage and costly to resolve. EPLI coverage ensures you can protect your business, managers, employees, and directors from the high costs associated with an employment claim.
Should You Consider Professional Liability Coverage?
When you are looking for the right contractors insurance for your business, you will have many choices, including whether to buy professional liability insurance, also known as “errors and omission” insurance or “E & O.”
E & O is a liability policy that protects you if you make a mistake that causes a financial loss to a client. Similar to general liability, it will provide legal defense and claims settlements, if necessary.
You may want or need this coverage under the following circumstances:
- You provide professional advice in your line of work. This can include everything from recommending a particular type of plumbing or wiring to providing interior design services.
- You hire employees or subcontractors who provide any sort of advice or consulting services.
- Your state requires you to have E & O insurance due to the work you perform.
If you utilize subcontractors, it is a good idea to make certain they are insured with professional liability as well, as they might not be covered by your policy.