Helping You Find the Right Employment Practices Liability Coverage
As a business owner, you’re likely familiar with the importance of general liability and workers’ compensation insurance. These policies protect your company from public lawsuits and employee injuries. But what happens if an employee—or even a former or prospective one—sues your business for wrongful termination, harassment, or discrimination? That’s where Employment Practices Liability Insurance (EPLI) comes in.
From the hiring process to exit interviews, the risks of employment-related lawsuits are real, but Peoples First Insurance is here to guide you in finding the right coverage. Whether you’re located in Panama City, Tallahassee, or beyond, we’ll help you explore policies that fit your needs and budget, ensuring you’re protected from the unexpected.
Key Takeaways:
- EPLI covers a range of claims related to wrongful acts in the workplace, including discrimination, harassment, wrongful termination, retaliation, and wage disputes.
- Claims can be made by current employees, former employees, and even prospective employees involved in the hiring process.
- Coverage typically applies to legal defense costs, settlements, and judgments, helping businesses manage the financial impact of employee-related lawsuits.
- Most policies are claims-made, meaning they cover incidents reported during the policy’s active period, regardless of when the event occurred.
- EPLI is crucial for businesses of any size, as even a single claim can result in substantial legal costs.
What Is Employment Practices Liability Insurance?
Employment Practices Liability Insurance (EPLI) is designed to protect businesses from the financial consequences of employee-related lawsuits. These lawsuits can arise from a variety of claims, and even if the claims are unfounded, legal defense and settlement costs can be significant.
EPLI policies typically cover:
- Discrimination: Claims based on race, gender, age, disability, religion, or other protected characteristics under federal or state law.
- Wrongful Termination: Lawsuits from employees who allege they were unfairly fired, demoted, or forced out of their positions.
- Sexual Harassment: Protection against claims of inappropriate behavior or harassment in the workplace, including those involving managers, coworkers, or third parties.
- Retaliation: Coverage for claims where an employee alleges retaliation after filing a complaint or participating in a workplace investigation.
- Employment Contract Breaches: Disputes over the terms of employment contracts, including issues related to pay, promotions, or job duties.
Why Do Businesses Need EPLI Insurance?
Many business owners assume that general liability or workers’ compensation insurance will cover employee-related claims, but that’s often not the case. EPLI specifically addresses risks like wrongful termination, discrimination, harassment, and retaliation, which can lead to costly lawsuits. Without EPLI, businesses could face significant financial strain from legal fees, settlements, or judgments that may impact their ability to stay afloat.
Data from the Equal Employment Opportunity Commission (EEOC) shows that claims frequently arise from issues such as race, sex, age, and disability. These types of claims can be especially challenging for small businesses, as they may not have the financial resources to handle the high costs associated with defending against such lawsuits.
With employment-related lawsuits on the rise, and almost half of cases targeting businesses with fewer than 100 employees, it’s important for companies of all sizes to consider EPLI as part of their overall risk management strategy. While it may not seem urgent, having EPLI in place could protect your business from unexpected legal and financial challenges down the road.
What Does Employment Practices Liability Insurance Cover?
EPLI provides financial coverage for specific costs associated with defending against employment-related claims. Here’s how it works:
- Legal Defense Costs: EPLI covers attorney fees, court costs, and other legal expenses required to defend your business, whether the claims are legitimate or not.
- Settlements & Judgments: If a claim is resolved through a settlement or results in a judgment, EPLI can help cover the financial obligations, including compensation awarded to the employee.
While no business ever expects to face these situations, EPLI ensures you’re prepared to manage the financial consequences if they arise.
What EPLI Does Not Cover
While EPLI provides valuable protection, it’s important to understand its limitations. There are certain scenarios that typically fall outside the scope of coverage, including:
- Criminal Acts: EPLI will not cover any claims involving illegal activities committed by your business or its employees.
- Civil Fines or Punitive Damages: In some cases, EPLI may not cover fines or punitive damages that result from a lawsuit.
- Other Insurance Claims: Claims that are covered under other policies, such as workers’ compensation or general liability insurance, are not included in EPLI coverage.
Knowing what EPLI doesn’t cover can help you make informed decisions and ensure you’re fully protected in all areas of your business.
How Much Does EPLI Insurance Cost?
We know that when businesses are planning their risk management strategies, cost is always a key consideration. While EPLI insurance costs can vary, a small business might typically pay between $100 and $300 per month. Of course, this depends on the specific circumstances of your business.
There are several factors that can influence the cost of your policy, and it’s important to keep these in mind when evaluating your coverage options:
- Business Size: The larger your business, the higher the potential for claims, which can drive up premiums.
- Industry: Businesses in industries with higher exposure to employee-related claims, such as healthcare or retail, often see higher premiums.
- Claims History: A record of previous claims can result in higher insurance costs, as insurers see this as an increased risk.
- Hiring and Termination Practices: Businesses with clear and structured hiring and termination procedures are often viewed as lower risk, which can lead to lower premiums.
- Employee Turnover Rate: Frequent turnover can indicate instability, which may raise the cost of EPLI coverage.
- Coverage Level: The amount of coverage you choose—whether it’s basic protection or a more robust policy—will also impact the price.
While the cost of EPLI insurance is an important factor, it’s essential to compare that with the potential financial impact of a claim. The average cost to settle an employment-related lawsuit out of court is around $75,000, and costs can climb much higher if the case goes to trial. Considering these risks, EPLI can offer peace of mind and significant protection for your business.
How to Get Started with EPLI Insurance
Understanding the costs and coverage options for EPLI is just the first step. With so many factors influencing what your business might pay, it’s important to find the right coverage that fits both your needs and your budget. That’s where Peoples First Insurance comes in.
We take the headache out of the process by helping you assess all the factors that affect your EPLI policy, from coverage levels to specific business risks. Whether you’re looking for quotes or need guidance on choosing the right policy, we’re here to make sure your business is fully protected—so you can focus on what you do best.
Reach out to Peoples First Insurance today,
and let us help you find the right coverage at a cost you can afford.
EPLI Insurance FAQs
The amount of EPLI coverage you need depends on the size of your business, how many employees you have, and the risks associated with your industry. EPLI policies come with “limits,” which is the maximum amount the insurance will pay for a claim. These limits typically range from $100,000 to $1,000,000 or more.
When deciding on coverage, it’s important to consider how much protection your business might need. While smaller businesses may think a lower limit is enough, it’s important to remember that legal fees and settlements can add up quickly. A higher limit offers more financial protection but may also increase your premium. Peoples First Insurance can help you figure out the right balance, ensuring you have enough coverage without overextending your budget.Most EPLI policies don’t cover wage and hour claims, such as disputes over overtime pay or misclassification of employees. However, some policies may offer limited coverage for legal defense costs related to these claims. It’s important to review your policy carefully to see what’s included. If wage and hour claims are a concern for your business, Peoples First Insurance can help you explore additional coverage options.
EPLI stands for Employment Practices Liability Insurance. It’s a type of insurance that protects businesses from employee-related claims, such as wrongful termination, discrimination, harassment, and retaliation. This coverage helps cover the costs of defending your business in these cases and any settlements or judgments that may result.
Third-party EPLI coverage extends your employment practices liability insurance to cover claims made by non-employees, such as customers, vendors, or clients. These claims could include harassment or discrimination that happens while interacting with your business. Having third-party EPLI coverage can help protect your business from legal risks outside your employee base.
No, Employment Practices Liability Insurance (EPLI) and Directors and Officers (D&O) insurance are different. EPLI covers claims related to employee issues, such as discrimination, harassment, or wrongful termination. D&O insurance, on the other hand, protects company executives and board members from claims related to decisions they make while managing the company, such as financial mismanagement or breach of duty. Both policies are important for different reasons, and many businesses choose to have both types of coverage.
Employment Practices Liability Insurance (EPLI) and Errors and Omissions (E&O) insurance serve different purposes. EPLI covers claims made by employees for issues like wrongful termination, harassment, or discrimination. E&O insurance (also known as professional liability) covers claims from clients or customers who allege that your business made a mistake or provided inadequate services. While EPLI protects you from employee-related claims, E&O protects you from claims related to the services or advice you provide.
The deductible for EPLI is the amount your business is responsible for paying out-of-pocket before the insurance coverage kicks in. Deductibles can vary depending on the policy you choose and the size of your business. They might range from a few thousand dollars to tens of thousands, depending on your coverage. A higher deductible may lower your premium, but it also means your business will need to cover more upfront costs in the event of a claim.
- Criminal Behavior: Any claims tied to illegal actions or intentional misconduct by the business or its employees are not covered.
- Wage-and-Hour Disputes: Issues related to wages, such as unpaid overtime or failure to meet minimum wage requirements, are often excluded from EPLI coverage.
- Physical Injuries and Property Damage: EPLI does not cover claims involving bodily injury or property damage, which are typically addressed by general liability or property insurance.
- Claims for Workers’ Compensation, Unemployment, or Disability Benefits: Disputes related to workplace injuries, unemployment benefits, or disability claims fall outside the scope of EPLI and are covered by other types of insurance.
- Claims Related to Other Federal Laws: Certain claims arising from federal laws, such as the National Labor Relations Act (NLRA) or the Employee Retirement Income Security Act (ERISA), are usually not covered under EPLI policies.
Yes, EPLI coverage can often be bundled with other types of business insurance. Many insurance providers offer EPLI as an add-on to broader policies, such as a Business Owner’s Policy (BOP) or general liability insurance. Bundling EPLI with other coverages can be a convenient and cost-effective way to protect your business from multiple risks. However, keep in mind that EPLI specifically addresses employee-related claims, so it’s important to ensure you have adequate coverage based on your business’s needs. Peoples First Insurance can help you explore bundling options to find the right protection for your business.