Employment Practice Liability Insurance

Any company with one or more employees has exposure to employment practices claims. While it is common for employers to think of their exposure in this area as limited to sexual harassment, consideration must also be given to claims for wrongful termination and discrimination. Such claims are becoming more and more prevalent due to the increased press and the magnitude of the publicized settlements.

Because of the increasing potential for large claims, whether legitimate or questionable, it is no longer acceptable to rely solely upon loss control techniques such as an employee handbook or a “zero tolerance” policy. The fact is, incidents will occur that require a legal defense and possibly settlement dollars. These expenses are properly anticipated and funded with Employment Practice Liability Insurance (EPLI).

The purchase of EPLI has a twofold benefit. First, the carrier will work with you to provide a loss control program, or audit an existing one. Obviously, the best way to deal with employment related liability issues is to avoid situations which generate these claims, or minimize the ones that do occur.

However, even the most thorough and conscientiously executed plan will eventually be penetrated, and that’s where the insurance element will come into effect. EPLI is usually written with a deductible so that the smaller, expected claims do not generate adverse loss experience under the policy, which typically equates to higher premiums at renewal. Instead, the policy is used to protect the Company from significant financial loss from large unexpected claims.

Public Company will have a stand alone EPLI policy so the limit will not be diluted with other claims or defense costs.

Private and Non Profit entities will include EPLI coverage within their directors and officers (D&O) policy. Because coverage is included on the D&O policy it is important to ensure proper limits are purchased.

For more information on how to design an EPLI program that best suits your needs, contact Financial Specialty via e-mail or call Ben Miner at 214-468-8666.