Employers are aware that they are accountable for the security and welfare of their staff members. But what about their legal rights? What if the employer get’s charged with discrimination or harassment? That’s where Employment Practices Liability Insurance (EPLI) comes in handy. Employers are protected by this kind of insurance from claims of sexual harassment, wrongful termination, discrimination, and other employment-related problems.
EPLI can also pay for any damages as well as the expense of the employer’s legal defense. For every company, giant or small, EPLI is an essential layer of defense. Consult your insurance agent if you’re unsure if you require it. They can assist you with risk assessment and coverage verification.
For the purpose of this article, let’s explore the nitty-gritty of EPLI.
About Employment Practices Liability Insurance (EPLI): What Does It Mean?
Employee lawsuits against their employers are becoming more common, especially as employment conditions become more turbulent. So much so that businesses of all sizes now need to pay attention to the repercussions that could follow suit with such lawsuits.
EPLI works to protect businesses from worker allegations of different types of impropriety. The insurance plans cover the business’s legal defense expenses, judgments, and settlements. The purpose of EPLI is to guard against financial damage associated with defending against and resolving accusations of unlawful employment practices.
What Is Covered Under EPLI?
The following are the benefits covered under EPLI:
- Mismanagement of employee benefits
- Sexual harassment
- Wrongful termination or demotion
- Slander or libel
- Discrimination
- Breach of employment contract
- Privacy invasion
- Emotional or mental distress
Does Your Business Really Need EPLI?
When a worker files a lawsuit over matters of employment, your small business is safeguarded by EPLI. When an employee or group of workers alleges that their civil rights were infringed or that they were unable to do their task in a fair atmosphere, this policy will pay for your legal fees.
According to the studies, litigation involving employees affects almost 4 out of 10 small enterprises.
When an employee of yours files a third-party lawsuit against another company over sickness or accident, you might be held liable for that company’s legal costs as well. A family member of your employee may also sue you for damages if one of your employees passes away due to a work-related accident. This is why your business really needs EPLI.
As mentioned above, this insurance shields businesses from claims resulting from workplace mishaps. Your legal expenses, including settlements and judgments, will be covered by the insurance.
What Are the Exclusions of EPLI Policies?
EPLI excludes the following claims from coverage:
- Bodily injury or property damage
- Deliberate behavior
- Labor conflicts
- Nuclear/Radioactivity
- Conduct
- Wage and hour claims are not covered by insurance unless the insured obtains a separate endorsement
Pros of EPLI Policies
- Businesses are represented by an expert law firm or a panel counsel
- A thorough examination of claims is carried out by insurance providers
- The attorney rates are reduced
- Small businesses are prevented from jury verdicts that could send them out of business
Cons of EPLI Policies
- As mentioned above, EPLI doesn’t cover everything. This may include social security claims or claims under acts like the Fair Labor Standards Act or the Occupational Safety and Health Act, etc.
- EPLI policies cannot be considered a replacement for the competent HR practices that a business must otherwise put in place. The latter is essential to keep the problems at bay before they transpire into something that could lead to a lawsuit.
General Cost of EPLI
Employee lawsuits may be detrimental to both the financial and reputational health of a business, and understandably so. As a matter of fact, the average cost to settle this kind of claim is $200,000 for small to medium-sized enterprises. You avoid paying these expensive charges out of pocket thanks to EPLI coverage. Any costs associated with a legal defense, such as a settlement or verdict, may be covered. Your insurance provider could select a lawyer for you. If a claim is made, certain EPLI contracts specify that the insurance company will pick your attorney. Of course, the insurer prefers a law firm with experience in similar scenarios.
Gonzalez Insurance Is Here to Help!
Gonzalez Insurance offers business-focused insurance solutions, including EPLI. We partner with our clients and educate them about the available options to help them make informed decisions.
What’s best is that businesses can get personalized insurance plans best suited to their needs. Connect with our expert team to know more about EPLI-related claims and lawsuits.