Employment Practices Liability Insurance provides protection for an employer against claims made by employees, former employees, or potential employees. It covers discrimination (age, sex, race, disability, etc.), wrongful termination of employment, sexual harassment, and other employment-related allegations. These types of claims are not covered under a general liability insurance policy.
Who Needs Coverage?
Employment Practices Liability Insurance (EPLI) is needed by any business with employees and those which begin to hire employees. It used to be that EPL claims were limited to major corporations. This is no longer the case. In today’s litigious climate, employers of all sizes are vulnerable. According to EEOC data, 41% of all EPLI claims are brought against small employers with 15 to 100 employees.
Why is Employment Practices Liability Insurance Needed?
Statistics show businesses are more likely to face an employment claim than a property or general liability claim. Cases against employers are on the rise. Once these claims manifest, they become a huge burden on a businesses assets and can easily put a small employer out of business for good. Here are some powerful statistics that bring the seriousness of EPL claims to light:
- The average amount paid for out of court settlement is $40,000.
- Defense of an average EPL case, through trial, costs over $45,000.
- The median compensatory award for EPLI cases is $218,000.
- 67 percent of all employment cases that litigate result in judgement for the plaintiff.
- 41 percent of all EPLI claims are brought against small employers with 15 to 100 employees.
- Six out of ten employers have faced employee lawsuits within the last five years.
- The U.S. Equal Employment Opportunity Commission (EEOC) announced this past January that in 2009, more than 93,000 workplace discrimination charges were filed with the federal agency nationwide. This is the second highest level ever recorded
EPLI policies will reimburse your company against the costs of defending a lawsuit in court, even if a claim is groundless or fraudulent. They will also compensate for judgments and settlements. It doesn’t matter whether your company wins or loses the suit. Policies typically do not pay for punitive damages or civil or criminal fines, however.
How much does an EPLI Policy Cost?
The cost of coverage depends on your type of business, the number of employees you have, and various risk factors such as prior claims or loss history. Your insurance agent can provide a quote with very minimal information, often right on the spot.