A Quick Guide to Employment Practices Liability Insurance

Your employees are an invaluable resource. However, there are some instances when employee-related issues may arise. Employment Practices Liability Insurance (EPLI) provides financial protection for your business if you should need to fight allegations from an employee. Common issues in the workplace include harassment and discrimination. Employment Practices Liability covers your business through the litigation process, as well as any covered judgments or settlements. It acts as a standalone policy, but in some cases, you may have the option to add the coverage to your commercial liability insurance policy or BOP.

Why Do You Need an EPLI Coverage?

It is not uncommon for a business owner to have to deal with an issue in the workforce. Defending your business against these allegations can be time-consuming and very expensive. If you have a small business, the legal process can be devastating, both financially and with regard to the reputation of your business. EPLI coverage can help your business fight these allegations and still feel confident about the future. Not only does EPLI coverage protect your business through the litigation process, but you will also receive consultation on risk aversion strategies so that you are less likely to deal with another workplace issue in the future.

Extent of Coverage

Employment Practices Liability Insurance helps protect against covered claims filed by your current and previous employees, as well as potential candidates that you choose not to hire. Any seasonal employees or independent contractors are also eligible to file a claim against your business. Common issues in the workplace that lead to claims are wage and hour, wrongful termination, sexual harassment, breach of contract, wrongful discipline, and illegal discrimination based on age, race, or sex.

What Is Not Covered by EPLI?

There are possible exclusions to Employment Practices Liability insurance policies. Common exclusions include criminal acts, workers’ compensation claims, wage violations, and previous litigation. EPLI does not cover claims related to strikes and lockouts. COBRA violations are also excluded. COBRA states that any employees who leave their job can continue receiving health insurance for a limited timeframe after leaving.

How Much Does an EPLI Cost?

The cost of your EPLI coverage may vary based on the number of employees you have, the industry that you operate your business in, your coverage limits, and the deductible amount. Also, keep in mind that your premiums may be high if you have a high turnover rate and a frequent amount of claims filed.

How Is EPLI Different from Professional Liability Coverage?

There are key differences between Employment Practices Liability and Professional Liability. Professional Liability focuses on protecting your business against allegations based on your services. You can use Professional Liability Coverage if a former client sues you for negligent service. EPLI protects you against allegations made by people who work for your business.

Document Your Company Procedures and Policies

Make sure that you have an employee handbook that thoroughly outlines policies and procedures and varies by state. The handbook should include guidelines on how to handle disciplinary issues and employee complaints. Every job should include a detailed description of the necessary skills and performance to complete tasks. Make sure that there is a zero-tolerance policy for any issues regarding discrimination, substance abuse, and harassment.

Employment Practices Liability Insurance can protect your company from financial ruin. Even if you have a strong workforce, your business can be sued. An EPLI policy can help protect the future of your business. If you have any questions about the benefits of an EPLI policy, the experts here at Modab Insurance Services will assist you. Contact us today to learn more!

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