When speaking with clients and prospective clients, we often ask: Does your business have Employment Practices Liability Insurance (EPLI)?
EPLI coverage protects your business from a variety of employee-related lawsuits, including claims of:
- Sexual harassment
- Discrimination
- Wrongful termination
- Breach of employment contract
- Negligent evaluation
- Failure to hire or promote
- Wrongful discipline
- Deprivation of career opportunities
The cost of EPLI coverage varies for small businesses and depends on factors like your industry, the number of employees, and your claims history. EPLI protects your business from potentially costly lawsuits, including those filed by current or former employees claiming defamation or breach of contract.
What EPLI Does Not Cover?
While EPLI provides protection against claims arising from employment-related issues, it's important to understand its limitations. Typically, EPLI does not cover:
- Bodily Injury or Property Damage: EPLI policies are designed to cover non-physical, employment-related claims like discrimination or harassment. They do not cover bodily injury or property damage claims, which are usually handled by general liability insurance.
- Intentional Acts: Deliberate actions, such as assault, battery, or other forms of intentional harm, are not covered by EPLI. If an employee or employer engages in criminal conduct, including fraud, assault, or intentional infliction of emotional distress, the insurance will not provide protection. Coverage is intended for negligent acts rather than deliberate wrongdoing.
- Criminal Conduct: Any claims related to illegal activities, such as theft, fraud, or embezzlement, are excluded from EPLI coverage. These are typically handled under a crime insurance policy.
- Privacy Violations: In cases where there are allegations of privacy violations (such as breaches of confidential employee information), EPLI policies may not provide coverage. Privacy issues are often covered under a separate cyber liability policy.
- Wage and Hour Claims: Claims related to wage and hour violations, such as unpaid overtime or misclassification of employees, are typically excluded or may have limited coverage under an EPLI policy. Some policies may offer limited sub-limits for defense costs, but not the actual damages.
- Workers' Compensation Claims: EPLI does not cover claims related to workplace injuries, which are generally covered by workers' compensation insurance. Similarly, claims related to unemployment benefits or ERISA violations are also excluded.
- Punitive Damages: Depending on state laws and policy provisions, punitive damages, which are intended to punish an employer for especially wrongful conduct, may not be covered by EPLI.
Understanding these exclusions is critical for businesses to ensure they have the right mix of insurance coverage to address various risks.
How Much Does the Average EPLI Claim Cost?
For businesses of all sizes, the financial impact of an EPLI claim can be significant. The average jury award is around $250,000. Even if a case settles, the settlement payment typically averages $75,000, with defense costs adding another $120,000 per claim. And if the case is lost, businesses are often required to pay the claimant's legal fees, which can average $200,000.
At RMC Group, we recommend a minimum EPLI limit of $500,000 to provide adequate protection, with flexible options for retention to help manage costs. While some Business Owners Policies (BOP) include EPLI coverage, their limits are usually too low for most companies to rely on.
Our goal is to ensure that you're fully protected against unexpected employment-related claims. We're here to guide you through your coverage options so that your business stays secure.
If you'd like to discuss EPLI coverage or receive a personalized quote, click here to fill out our quote form or call us at 239-298-8210. We're ready to help you safeguard your business.