Employment Practices Liability Insurance 

IS YOUR BUSINESS PROTECTED FROM COSTLY CLAIMS? 
 
 

Many farm and business owners make employment decisions — including hiring, compensating, and terminating — that can expose them to wrongful employment practices claims. Under most Commercial General Liability or Business Owners policies, employment practices liability exposures are excluded from coverage unless specifically added by endorsement, leaving your business without protection against such claims. Having Employment Practices Liability Insurance (EPLI) can help keep your business safe from damages caused by these types of claims, which have become increasingly common and are often financially devastating.

Today’s small businesses are particularly vulnerable to wrongful employment practice charges that employees, recognized volunteers, or potential employees can claim. These costly allegations can have major impacts on your business’s reputation and finances.

 

What is Employment Practices Liability Insurance?

EPLI is a form of liability insurance that provides protection for an employer against claims made by employees, former employees, or potential employees. A charge can be brought by applicants, employees, and even customers alleging discrimination, harassment, wrongful termination, or other wrongful employment acts. An EPLI policy covers discrimination (age, sex, race, disability, etc.), wrongful termination of employment, sexual harassment, and other employment-related allegations.

 

I’ve never had an issue with an employee before – why would I need EPLI?

According to recent industry studies, at least 10% of employers will face some type of wrongful employment practices charge. In states with labor-friendly laws, the odds can be even higher. Farms and equestrian businesses, which are often set up and run under less formal policies, are particularly vulnerable. For many it’s a matter of “when”, not “if”! EPLI is designed to protect against the substantial, and potentially devastating, cost of such lawsuits.

 

Overview of Employment Practices Coverage Protecting Small Businesses

What types of coverage does EPLI provide? Let’s take a look!

  • Insuring Agreement: Pays for losses arising out of an insured’s wrongful employment act against employees, recognized volunteers and applicants for employment.
  • Duty to Defend: Right and duty to defend and appoint an attorney to defend any claim or suit brought against an insured for a wrongful employment act or third party violation, even if the claim or suit is groundless.
  • Worldwide Coverage: Provides coverage for wrongful employment acts or third party violations anywhere in the world. Claim must be made and suit must be brought in the United States of America, its territories and possessions, Puerto Rico or Canada.
  • Third Party Coverage: Provides coverage for discrimination or sexual harassment against an insured’s clients, customers, tenants or vendors.’
  • Supplemental Reporting Period: Provides the insured the option to purchase an extended reporting period following cancellation or non-renewal. Allows for notice of claims made during the SERP for wrongful employment acts occurring during the coverage period.
  • Automatic Extended Reporting Period: Provides the insured with protection for a period of sixty days after the effective data of cancellation or non renewal, at no additional premium, to give notice of claims.

 

Some of the types of claims that EPLI can protect your business from include: Age Discrimination, Retaliation, Gender Discrimination, Wrongful Termination, Race Discrimination, Sexual Harassment, and Third Party Discrimination: National Origin. These types of claims are common across all industries.

Your EPLI policy will reimburse your company against the costs of defending a lawsuit in court and for judgments and settlements. The policy covers legal costs, whether your company wins or loses the suit.

According to the most recent Hiscox report on employment lawsuits, a representative study of 1,214 closed claims from small to medium-sized businesses with fewer than 500 employees showed that 24% of employment charges resulted in defense and settlement costs averaging $160,000. On average, these cases took 318 days to resolve. Cases that go to jury have significantly higher costs and time.

These cases can often be financially devastating to small businesses – EPLI insurance can help keep you protected. Want to learn more? Galvin Agency is here to help!

 
 
 

 

 

Did you Know?

We offer a wide variety of insurance products to include Home, Auto, Life, Annuities, Motorcycle, RV, ATV, Boat, Small Business, Rental, Umbrella, and Equine Mortality/Major Medical coverage.
 
Galvin Agency is here to help you with insurance questions, needs, and claims. We are here to assist you and our job is to make sure you feel protected and knowledgeable. Thank you for your business and we look forward to talking with you soon!

No person associated with this news letter receives any form of compensation for any products mentioned, nor should any mention of a particular product be considered an endorsement of that product. This newsletter is for informational purposes only and should not be considered authoritative on any topic. Please seek advice from an appropriate professional on any specific issue.

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