Employment practices liability insurance (EPLI) is a form of errors and omission insurance and protects your business against employee claims of discrimination, which could be based on age, sex, disability, race, or other traits. EPLI also covers suits regarding harassment or wrongful termination. In fact, as its name implies, its key function is to provide coverage if your employment practices are called into question.
If you’re the owner of a small to midsize business, you may assume this coverage is for large corporations. But bear this in mind: Although large corporations have hefty teams of lawyers on retainer to handle any employee lawsuits, it’s actually small and/or new business owners who are most vulnerable to these suits. As soon as you hire your first employee, this coverage becomes crucial.
Can you afford EPLI? The real question may be, can you afford not to have it? Claims and awards continue to increase, and you are at risk from discrimination claims in the same way as you are at risk from other types of liability claims. Plus, EPLI may be more affordable than you think.
Its cost is based on several factors. The top variables include the number of people you employ, your turnover rate, your established rules and employee practices, and whether you’ve had any suits filed against you in the past.
Regardless of size, EPLI should be part of any company’s risk management plan. Discuss EPLI policy options and costs with your insurance agent, who can help you select the coverage you need.