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EMPLOYMENT PRACTICE LIABILITY
An employment practices liability insurance policy is commonly referred to as EPLI. An EPLI policy provides you protection from accusations of employment discrimination, harassment, wrongful termination and other employment related litigation subject to the policy limitations and exclusions. Lawsuits regarding employment issues are one of the fastest growing classes of lawsuits and insurance claims.
The statistics are alarming. According to the 2009 Bloomberg Law Report, there are 6.5 employment practices liability claims made per 1,000 employees each year. If your company has 100 employees, then the Bloomberg report would suggest your business would average 6.5 claims per decade. Therefore, the Bloomberg report implies, it is not a matter of if, it is a matter of how many, when and how much.
Furthermore, the U.S. Equal Employment Opportunity Commission reported almost 100,000 charges of discrimination in 2010. That’s 273 discrimination lawsuits per day are filed and that does not include privately filed claims. As a result, approximately 30% of all civil litigation in America is EPL claims.
In many classes of business there is a higher probability of having an employment practice liability claim than a general liability or property insurance claim.
Will your general liability policy help, if you have an employment practice lawsuit? The answer is highly unlikely. Your general liability policy probably excludes employment practices and most umbrella policies will also contain employment practices liability exclusions.
Unfortunately EPLI is not cheap, but the cost of a claim is much more. Remember, you do not have to be wrong to get sued.
One of our clients is a small non-profit organization. When, the non-profit organization requested a directors & officers liability policy, we included EPLI coverage. You’re thinking, who would sue a non-profit? A terminated employee did. The lawsuit was successfully defended and the legal fees exceeded $75,000. You might think you can’t afford an EPLI policy, but the reality is you might not stay in business without it.
The ideal situation is to secure a separate EPLI policy, but if your budget does not allow the expense of a separate policy, then EPLI can be added to a directors & officers liability policy or even a business owner’s policy. If you add the EPLI to another policy you will not have as broad of coverage and the amount of protection is generally much lower. What I am saying is if your business owner’s policy provides you with a $10,000 maximum limit and with a few perils insured against, this route will not help you much in any employment practices liability lawsuit.
To start protecting your business, you start by requesting a quote. The application is quick and simple, fewer than a dozen general questions and contact info. Once you have the quote, you can determine whether to acquire EPLI protection.