Businesses are more likely to be to have an Employment-Related Claim than they are to have a Claim relating to their General Liability Policy or their Property Policy.
Employment Practices Liability Insurance (EPLI) is one of those coverages that are not commonly thought of by business owners. This problem is compounded by the fact that the General Liability Policy specifically excludes this coverage.
So what is EPLI Coverage?
EPLI Coverage is insurance protection against Wrongful Acts as an Employer against Employees. These acts can include the following:
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Harassment; sexual or any harassment based on any legally protected status
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Discrimination
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Wrongful Termination
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Misrepresentation
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Retaliation
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Libel
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Slander
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Humiliation
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Defamation
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Invasion of Privacy
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Failure to Promote
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Wrongful Demotion
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Wrongful Discipline
This is not a complete list and some policies may have more or fewer items covered, but these are the main areas of coverage.
Examples of this coverage are:
-An Employer is sued by an applicant alleging they were not hired because of their race.
-An Employer is sued by an employee who claims they were misrepresented in a job performance review resulting in their being terminated by the Employer.
-An employee alleges sexual harassment by a manager.
EPLI policies are usually written on a Claims-Made Form. This means that coverage is only effective while the policy is in force or during the Extended Reporting Period and is reported during the period between the Retroactive Date and the Extended Reporting Period. Outside of that time frame, there is no coverage.
Another aspect not commonly thought of with regards to EPLI Insurance is called 3rd Party EPLI Coverage. This provides coverage for 3rd parties that allege harassment or discrimination towards a 3rd Party done by a member of the Insured Organization.
This would come into play if a customer alleged that an employee had harassed them or discriminated against them. The coverage would come into play to defend the business from these allegations and if legally liable, would pay the resulting damages.
How to Buy EPLI Insurance?
EPLI policies can be purchased in a variety of ways. The coverage can be included in a Business Owners Policy, part of a Directors & Officers policy, or it can be purchased as a stand-alone policy. Which way depends on your business and what needs your business has.
Any business that has employees has some need for EPLI Coverage and yet most businesses do not have this coverage in place.
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