What is EPLI & Who Needs It?

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There always will be risks in managing employees since potential lawsuits hide behind every employment decision.

In general, it is more likely for a business to have a claim that is employment-related than to have a fire. So while companies seldom skip fire protection, why would they ignore EPLI policy and costs related to it?

More often than not, big companies have a considerable number of insurance policies in place, including liability insurance. However, although big companies are prepared for the cases in which employees file a claim if you are a small business, that doesn’t necessarily mean you won’t need EPLI coverage sooner or later.

Insured companies can save money using the services, provided in most employers practice liability insurance policies. Adding such a policy into your risk management package, be it a GL (general liability policy) or BOP (business owner’s policy) can protect your company or business from lawsuits.

“From the moment you interview a potential candidate, your company might be at risk of an employment-related claim.”

What is EPLI Insurance?

Employment practices liability insurance by definition protects the employers and companies from potential losses and expenses in a case when an employee or a third party sues you for work-related incidents such as accidents, illness, or death.

An employment practice liability insurance protects employers and ensures coverage for the claims from their employees, which can range from simple errors and omissions to more serious issues like wrongful dismissal or harassment-related cases. To put simply, it provides extensive insurance protection from a broad range of claims and potentially even lawsuits that employees can bring against a company or any of its subjects.

If you have more than one employee, that might as well mean that you may need employers practice liability insurance in the future. Rather than exposing your business to potential financial dangers, you can prepare by getting EPL coverage.

Today, businesses are not required to have employers liability insurance by law. That said, it can be reasonable, and in some cases even viable to have such coverage to prevent any potential claims from former employees.

What Does EPLI Cover?

There are many potential risks employers can face when dealing with professional liability and employment-related claims. EPL coverage can protect your company from hazards that are usually associated with feuds with former employees. As a rule, an Employment Practice Liability policy can cover the business from expenses based on personal grievance claims typically alleging problems such as:

There are other insurance policies that provide coverage for losses from claims filed by workers that became ill or injured as a direct result of their employment. If an employee feels like their workers’ compensation doesn’t cover their expenses or losses, EPLI coverage will cover expenses that are not included in the workers’ coverage.

What EPLI Doesn’t Cover?

Undoubtedly, the policies revolving around employment liabilities don’t provide cover for every given situation or circumstance. There are multiple exceptions to EPLI policies that can’t be covered, however. These include but are not limited to fraud, advantages or profit gained illegally, law violations, and similar fraudulent or criminal acts. Moreover, some business types are not required to have EPL to run it without impediments. These are usually:

Although the risk of getting sued in these cases is low, companies are still highly recommended to opt for or consider getting EPL coverage to minimize potential financial risks or damages.

How Expensive Is EPLI?

The costs of EPLI insurance coverage and premium costs can differ by state. On top of that, prices on policies can differ based on how big your business is and on how many employees or hired workers it has.

Similarly, the costs related to EPLI can also be different judging by the industry company operates in. Other risk factors can also influence the final price of an EPLI policy. However, with defense costs reaching nearly $50,000 or even as high as $70,000 in certain cases, you must be prepared. So, opting for an EPL policy is a better option than facing legal costs.

As a rule, most of the EPL claims settle early. However, in some specific cases, lawsuits can take months and even years to resolve, which can be quite damaging to the financial side of your business or company.

It is common for businesses of all sizes to be targets of lawsuits and protecting what’s yours is paramount. Opting for a policy from an insurance company that offers ELI coverage will be a good first step towards protecting your business which won’t let it become an EPLI statistic.


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