what is and is not covered by EPLI?
Employment practices liability insurance, or EPLI, is an insurance policy that provides coverage to employers against claims made by their employees.
These claims include:
- wrongful termination
- sexual harassment
- unequal or unfair pay
- discrimination (i.e. age, race, gender, sexual orientation)
EPLI covers the cost of lawsuits brought against your company by current, former, or prospective workers that believe that their legal rights have been violated or are displeased with your employment practices. Employers need EPLI to be financially protected from these claims.
However, EPLI doesn’t cover everything. The following are examples of what’s not covered:
- fraud or crime
- contractual liability
- on-the-job worker injuries
- punitive damages
- unemployment claims
Although some industries are more prone to these types of claims than others, the most common industries to have EPLI claims filed against them include construction, healthcare, professional services, and retail or food services.
how important is EPL insurance?
EPLI is important because all businesses with employees are susceptible to the threat of an employee submitting a claim against the company.
The policy protects business owners from these claims made by disgruntled employees and helps shield your business from potential financial ruin. Employee claims can be very expensive and even detrimental to small businesses.
EPLI helps cover the financial costs associated with legal action. Attorney fees and settlement costs are reimbursed by the policy, which means your business does not have the unexpected financial burden of paying off employee claim-related legal fees.
what’s the difference between EPLI and professional liability?
Professional liability insurance, also known as errors and omissions (E&O), covers legal action against your company from a client claiming inadequate work, negligence, services not delivered, and oversights.
This type of insurance is beneficial for businesses or professionals who give advice or provide a service for a fee in the healthcare, legal or financial industries, just to name a few. Examples of this would be doctors or lawyers.
It’s a good idea to have both EPLI and professional liability insurance as a business owner. The policies are not the same and cover different risks. While EPLI covers employee claims, E&O covers claims from clients.
what’s the relationship between D&O coverage and EPLI?
Directors & Officers (D&O) Liability insurance protects directors or officers of a company from personal losses if they are sued for committing negligent acts or misleading statements.
With this insurance, the executive’s personal assets are safe from a lawsuit. D&O covers losses associated with the lawsuit, including legal defense fees. Exclusions in D&O policies are also similar to other professional liability policies, including property damage, bodily injury, and fraud or misrepresentation.
D&O insurance, E&O, and EPLI all protect employers and/or managers in different ways. It’s important for businesses to assess their risk when deciding whether to purchase these types of policies and how much coverage to buy.
This is dependent on factors like what type of industry you’re in or the size and makeup of your company. While it’s beneficial for your business to have EPLI and the various types of policies discussed above, it’s even more advantageous to prevent issues with employment practices that would pose these risks. Read on for three tips to avoid employment practices issues.