Employment practices liability insurance (EPLI) is one commercial insurance option that aims to protect businesses from claims made by workers that their legal rights were somehow violated while employed.

Large businesses are often the target of employment practice lawsuits, but cases can be filed against any business.

What is Employment Practices Liability Insurance?

Employees can sue a business for employment-related issues. An employee has the right to file a lawsuit when they believe that an employer violated their civil rights or created a workplace that has an unfair environment.

As an employer, it’s essential that you lower your liability risks with commercial insurance that protects against employee lawsuits filed against you.

What Types of Lawsuits Does Employment Practices Liability Protect Against?

Commercial insurance is designed to help protect your business from liability, risks and lawsuits. A few of the many lawsuit types that EPLI protects against are:

• Breach of contract
• Discrimination
• Failure to employ or promote
• Mismanagement of benefit plans
• Negligent evaluation
• Privacy invasion
• Sexual harassment
• Wrongful discipline
• Wrongful infliction of emotional distress
• Wrongful termination

Insurance will cover all of the legal costs relating to these claims, up to the limit amount on your policy.

Coverage for a Potentially Costly Lawsuit

Small businesses, those with a small human resource team, may end up violating a person’s civil rights unintentionally. The same issue can happen at a large corporation, although human resource teams will do their best to avoid any potential violations from occurring.

Businesses face a lot of ramifications from a potential lawsuit, including:

• Loss of reputation
• Loss of business

Legal costs can be high, costing an average of $160,000 per incident for small- and medium-sized businesses.

Paying for EPLI allows you avoid paying high out-of-pocket costs during the lawsuit. However, an EPLI policy requires that the policy is active when the incident occurred and the file was claimed.

Coverage may also be available on an occurrence basis, but most policies will be on a claims-made basis.

Important Coverage Considerations

Insurance providers may have different terms in their policies, so you’ll want to read the policy over carefully and know what is being offered. A few of the key terms to consider are deductible amounts you’ll have to pay before coverage kicks in and exclusions in the policy.

Exclusions are very important to pay attention to, as they can cause coverage lapses depending on the business’ current operations. During an acquisition, or if you have to lay off a large portion of your workforce, policies may not offer coverage due to exclusions.

Under some policies, the insurer may choose an attorney on behalf of your business. If you would rather choose your own attorney, this would be something to discuss with the insurer when discussing your policy.

Business owners must take steps to limit their liability risks.

Employment practices liability insurance is just one step in limiting liability. Owners should also take additional precautions to lower their risks, such as creating clear work policies, educating employees and management, providing clear job descriptions and performing employee reviews regularly with written records.

role in premium rates.

If your company is at a high risk of litigation or has been involved in multiple litigations in the past, insurance premiums are likely going to be more expensive. You may also receive less favorable terms. Businesses can keep costs down through proper employee training and communication with customers to ensure that they’re satisfied with your service.

Errors and omissions insurance is an important part of a professional business provider’s business insurance. If you make a mistake or negligence occurs, even if it was the result of a temporary worker, insurance can help you protect your business from significant financial loss.

Call Complete Insurance Agency at (305) 667-7717 to learn more.