If you are owning any type of business regardless of the industry, there is always a risk of being sued by your employee. While you may have safeguarded your business from external factors like wind, fire, etc, an employee lawsuit may also dent your business in a significant manner. Even if done without intention, damage to the rights of an employee can lead to disturbing situations. EPLI insurance can help to safeguard you and your business from possibly expensive claims. Given as a stand-alone or shared with an existing policy, EPLI will protect the interests of the business against employee claims and lawsuits claiming discrimination. Looking to understand more about EPLI Insurance and its benefits? Keep reading to know more.
What is Employment Practices Liability Insurance (EPLI) and who needs it?
- Employment practices liability insurance (EPLI) safeguards the business from issues related to employment. This policy will reimburse the legal charges when any employee will claim about a violation of their rights in any described manner. EPLI is a kind of liability insurance that covers several claims under the policy including improper termination, Discrimination (depending on sex, race, disability, age, etc.), invasion of privacy, sexual harassment, and retaliation. Moreover, the policy will also cover claims raised from several other kinds of inapt behavior at the place of work, as well as other aspects related to employment such as insult, failure to promote, restriction of a career opening, failure to hire, and careless appraisal. The policy will cover right from directors, officers, people in the management, and employees as insureds.
- EPLI coverage begins immediately as any employee claims about the violation of their rights. This will ensure that you will be covered of all the charges of the incident including the legal ones before the event converting to a lawsuit. This EPLI insurance is a claim-made policy that consists of some usual exclusions such as damage to property, body injuries, purposeful activities, etc. These insurance norms have options for shrinking limits that is the expense of insurers related to defense charges that are usually part of the claim decreasing the limit of the policy. This tactic is different from a commercial general liability (CGL) where there will be complete coverage for defense costs along with the policy restrictions. Even though EPLI is given as a separate coverage, it is also usually given as an inclusion in the management liability package policy.
Advantages of EPLI:
Major unparcelled advantages of EPLI are as described below:
EPLI is a complete value for money: The coverage in the EPLI policy includes the legal defense fees and costs related to settlement or damage as per the limit of the policy. This coverage will be given irrespective of you win, lose or come to a settlement in the claim.
This is essential for safeguarding the business: Several disastrous effects to the business from a lawsuit have shown the importance that can be brought by EPLI.
Safeguarding all types of businesses: While only some business-like restaurants, retail, manufacturing, healthcare may be seen largely affected by employment-related claims, indeed, all other industries are also at some type of risk.
Prevention is better than cure: It is better to safeguard the business from possible lawsuits instead of looking for options in later stages.
What is the need for EPLI for businesses?
Employment lawsuits have become expensive and common:
Lawsuits related to employment violation issues have become more common. There are more chances to be sued by an employee than a natural calamity like wind or fire. But several businesses have the insurance to safeguard from natural calamity but not such lawsuits. This is true for small businesses that do not handle employee disputes properly and lead to big legal problems. Hence, having EPLI insurance will safeguard you from shelling out huge amounts related to legal charges, settlement, or claim charges. Neglecting to have EPLI insurance can highly dent the reputation and finances to great extent. There are regular instances of different types of businesses spending a significant amount of money to solve such kinds of disputes.
EPLI can cover wrongful termination claims:
Imagine a situation where you have to lay off the employees due to some unavoidable situation like the Covid-19 outbreak. This could lead to a situation of improper termination lawsuit due to their removal regardless of the reason. EPLI can come to the rescue in such situations depending on the type of coverage mentioned in the policy. Employment practices claims will always include legal fees as an additional charge even if the business is not faulty. This is the importance of EPLI as it can give you that much-needed peace of mind in any such situation.
EPLI is usually a claims-made policy:
EPLI is a claims-made insurance policy which means that the claim is covered only if the insurance policy is running during the occurrence of the event and the filing of the claim. If there is a situation where you terminate the EPLI coverage as the work is completed, but the previous employee can come back later to sue you. Without running EPLI coverage, you will not be reimbursed for lawsuit charges. EPLI gives you the option to extend the insurance coverage from its earlier end date.
Final thoughts:
Effective risk management consists of always being prepared for surprises that may risk your business heavily. Any kind of company having employees is at a risk of facing some kind of lawsuit. EPLI is the best option to protect the business whenever a potential, present or former employee press a claim for violation of their rights. But it is important to take the insurance coverage from a reliable firm like Risk Managers, LLC who perform several preventive measures. The firm will carry regular performance review and background checks and documentation of all the activities related to any issues. Risk Managers, LLC offer detailed coverage of all types of businesses irrespective of the industry and assure to give the best service to safeguard the business.
