You may be asking yourself, what the heck is EPLI? Well, we’re here to tell you it’s quite important. EPLI (employment practices liability insurance) is an additional insurance policy along with your Comprehensive General Liability insurance designed to mitigate your exposure to employment related lawsuits.
This makes EPLI a crucial level of coverage for almost any business regardless of size. With EPLI claims on the rise, companies are doing everything they can to protect their business amidst this new reality. *The number of employment related lawsuits has risen roughly 400% in the past 20 years. And you better believe it’s not just the big guys getting sued. Almost half of all employment related cases are brought against employers with 100 employees or less. So let’s take a few minutes to break down EPLI by answering 4 of the most common questions.
What is EPLI?
EPLI covers businesses against claims by workers that their legal rights as employees of the company have been violated. Other companies offer EPLI as a stand-alone coverage. Some common discrimination issues include:
- National Origin
EPLI also applies to some non-discrimination cases such as:
- Wrongful Termination
- Failure to Promote
- Wage and Hour Loss
As you can see, ELPI coverage is an essential part of any company’s comprehensive insurance plan.
Why is it important?
The numbers of employment-related claims have been steadily increasing over the years, in 2015 alone the EEOC listed over 161,000 complaints. Small businesses share a disproportionate amount of the claims, a staggering 40% of claims involve firms with less than 50 employees.
Who is it for?
Does your business perform any of the following:
- Hire or fire employees
- Demote or promote employees
- Offer raises to employees
- Communicate to or about other employees
- Manage benefits for employees
If you answered “yes” to any of these questions, then you need EPL insurance. That’s a yes, even if your business has a General Liability policy. That coverage alone does not protect you against EPL exposure. *In fact, General Liability policies specifically exclude EPL. That’s why it’s vital businesses obtain the proper stand-alone EPLI coverage.
What does it cost?
The costs associated with employment-related claims are much higher than one may think. Defending employment-related claims, even if the claim is without merit, is expensive. Legal costs alone can easily average more than $125,000 for a relatively simple case, and awards can be in the millions of dollars.
To determine your company’s premium, insurance companies look at the following:
- Number of Employees
- Turnover rates
- HR Procedures
- Claims History
- Policy Terms