Employment Practices Liability Insurance (EPLI) is designed to provide insurance against employment lawsuits. It provides coverage for claims made by employees, former employees and even potential employees who claims harassment, wrongful termination, discrimination, and other employment-related issues.
In any given day, business owners are at risk of possible employment liability risks. Small businesses are particularly vulnerable to employment claims which are costly in nature. The average cost to defend yourself in a single lawsuit is $150,000!
As a business owner, you have to ask yourself: Can you afford a $150,000 lawsuit without insurance coverage?
Cost of an EPLI Policy
An EPLI policy is a necessary cost of doing business in today’s world. Premiums vary by the type of business, number of employees and past records. Coverage of the policy usually starts on the date selected, but in many instances, can also cover a set period of time before the initiation of coverage.
The cost of not having coverage, simply outweighs the cost of having it. As your company grows and becomes more successful, it can become a bigger target. More people working together can lead to more exposure and more risk to your business.
Whether a sexual harassment claim is real or not, the cost to your company does not change, you will still have to deal with the costs of defending yourself. A company that has no EPLI coverage may and will be placed on a risky and expensive position of having to settle claims.
How Does it Work?
In a nutshell, the system works like this: the policy can cover most of the legal costs that are associated in defending your business in court. This includes fees for lawyers, judgments and settlements. It is the duty of your insurer to reimburse you for the charges, depending on the type of policy, regardless of whether you win or lose the lawsuit.
About Standard EPLI Coverages, Exclusions and Standard Provisions
- Standard EPLI Provisions – the typical amount of coverage provided by an EPLI varies as well as the deductibles and premiums. Usual coverages include settlements and jury awards, costs of defending claims, and attorney’s fees.
- Typical EPLI Coverages – EPLI coverages typically cover claims for discrimination, wrongful termination, sexual, racial and other types of employment-related harassment. Policies sometimes cover other matters, for example, wage and hour claims, but EPLI policies do not provide coverage for intentional violation of union-management issues and employment laws.
- General EPLI Exclusions – since EPLI policies are written for the national market, some policies do not provide coverage for state-specific claims. Example of such claims are claims of height, weight and marital discrimination under the Ellio-Larsen Civil Rights Act and the Michigan Whistleblower’s Act.
Some businesses have EPLI added to their business’ insurance policy and other might opt for it as a standalone policy.
Wage and Hour Coverage
Wage and Hour Insurance Coverage is a type of coverage that can protect you in the event of a claim alleging that your business failed to pay overtime to a nonexempt employee, who is eligible to receive overtime pay under the Fair Labor Standards Act. You need to be careful when purchasing an EPLI policy, as standard EPLI policy contains exclusions for both claims of unpaid overtime to those employees that qualify, and claims from employees who are misclassified. Due to the volatile nature of these claims, finding insurance coverage can be a challenge, as many companies have been unwilling to take the risk. Here at Inszone Insurance, we do have access to markets to approach and be able to secure that coverage for your business.
EPLI and COVID-19
Claims for EPLI are expected to rise with COVID-19, due to the high probability of wrongful termination claims, as many businesses are forced to lay off workers in order to survive the stay at home orders.
For essential businesses and other businesses that are opening in the upcoming weeks/months, there are fairly strict guidelines for social distancing and what you are responsible for providing to your employees. Recently, governments have stated that employees who refuse to come back to work once businesses re-open, will not be eligible for unemployment benefits. If an employee is scared to come back to work, there will be lots of dollars at stake for them. Bottom line when there’s potential for loss of money and employees are scared, you have an environment that is ripe for lawsuits.
EPLI as a segment of insurance will be hit extremely hard by this, it may not be possible to obtain policies in the near future, unless you’ve had one in place. Eventually things should return to some normalcy, but there’s never been a more important time to protect your business with the proper EPLI coverage. They may be available, but they will certainly be much more restrictive, if you’re looking to purchase these policies at a future date.
EPLI Is the Viable Solution
All employers should come up with a plan of action to address risk of employment lawsuits. However, no strategies are fail-safe. Employers must take the initiative to lessen this risk as it is part of doing business. EPLI is still the practical and cost-effective option to address risk.
It is important to review your current business policies and we are happy to help you take a look and provide information in how to fully protect your business. To learn more about EPLI coverage and get a free quote, please call us today at (877) 308-9663 or email firstname.lastname@example.org.