Did you know that commercial liability and commercial umbrella policies don’t usually cover employee lawsuits? Even though employee filings with the Equal Employment Opportunity Commission (EEOC) are increasing rapidly, along with the size of their associated settlements, some business owners don’t have the appropriate insurance coverage.
Small business owners are particularly at risk. Believing their close-knit group of employees would never file a lawsuit provides a false sense of security and can have devastating consequences. Let’s take a look at EPLI coverage and what it can do for your business.
What is Employment Practices Liability Insurance (EPLI)?
Employment Practices Liability Insurance (EPLI) covers wrongful acts arising from the employment process. The policy covers directors and officers, management personnel, and employees as insureds.
The cost of insuring your business under EPLI coverage depends on factors such as the number of people you employ, whether you’ve had any prior suits against your company, the percentage of employee turnover, and whether you have established rules and practices in place.
The most frequent types of claims under EPLI policies include:
- Wrongful termination
- Discrimination
- Sexual harassment
- Retaliation
EPLI policies also cover a variety of other types of inappropriate workplace conduct, such as:
- Invasion of privacy, libel, or slander
- Failure to hire or promote
- Deprivation of career opportunity
- Negligent evaluation
- Emotional distress
- Wrongful discipline
Conversely, an EPLI policy does typically not cover:
- Civil and criminal fines
- Wages you should have paid
- Damage you caused to employee property
- Disputes surrounding workers’ compensation benefits
- Litigation regarding unemployment benefits
Is Employment Practices Liability Insurance Necessary?
First and foremost, never assume your company is invulnerable to a lawsuit from an employee. Both large corporations and small businesses need coverage as a buffer to avoid dissolution or facing a judgment that forces them to declare bankruptcy. Any business that has employees may be sued by them and would benefit from obtaining EPLI coverage. Employers must be vigilant when it comes to protecting themselves, and having the right EPLI coverage is a good first step.
EPLI covers claims by employees alleging that their legal rights have been violated by either the company or a fellow employee or employees. While following all employment laws is perhaps the best way to protect your business from potential employment lawsuits, it’s not a perfect solution – even if no infraction was committed, the process of going through a lawsuit can be expensive. EPLI policies normally offer protection for claims regardless of whether the business is innocent or guilty, so long as the circumstances meet the policy’s terms and conditions.
As EPLI policies frequently offer coverages that apply during the hiring process, employers should be wise and get an EPLI policy before beginning the recruitment. Businesses of every size can benefit from EPLI coverage, with smaller and newer companies being especially vulnerable to employment-related claims.
What Are the Benefits of Employment Practices Liability Insurance?
The average cost to defend an employment lawsuit all the way through completion of trial is more than $100,000, with settlement cost on top of that. Without the valuable EPLI coverage, a suit of this magnitude could potentially put your company out of business. Here are some of the other key benefits that EPLI coverage can provide:
1. Protection. EPLI policies can help protect you from a wide range of claims and prevent you from having to pay exorbitant fees that could cripple your business. This protection covers everything from the hiring process throughout the employees’ scope of employment.
2. Expert representation. Strong EPLI policies provide the insured employer with access to expert legal resources, as many require the insured to be defended by a pre-approved law firm. These law firms are chosen based on their expertise and experience in defending employment-related claims.
3. Reduced attorney rates. Without EPLI coverage, hiring top notch representation can get quite expensive. EPLI policies typically have negotiated reduced hourly rates with the law firm, with your organization benefitting from those lower rates.
4. Qualified claims examiners. In addition to having expert lawyers on the case, insurance companies will also usually have claims examiners with established expertise and experience with defending employment-law claims. This means you will have two sets of expert eyes (the attorney and the claims examiner) helping protect your business.
FrankCrum’s EPLI Policy
At FrankCrum, we provide you with the tools and guidance you need to reduce the risk of employee lawsuits, but we also provide the peace of mind that comes from having the right insurance coverage.
FrankCrum has secured an EPLI policy that can provide you the protection you need. We have negotiated the policy terms to provide broad, cost-effective coverage in the event you need to defend a claim.
Here are some of the policy highlights:
- Coverage for each claim up to $1,000,000
- Efficient, helpful claims processing
- Experienced, knowledgeable attorneys to defend your company
- No upfront costs or down payments
The cost of coverage is based on the headcount of employees per week. Rather than paying a large premium upfront, with FrankCrum, you pay as you fund your payroll.
At FrankCrum, our mission is to help businesses become the best they can be. To learn more about our comprehensive services, contact us today.
