P&C-Business owner policy

Employment Practices Liability Insurance (EPLI) provides coverage for
employment-related claims not typically covered by general liability. The
coverage may or may not be included in a Directors and Officers policy. EPLI
coverage protects your assets in a claim arising from actual or alleged wrongful
employment practices. Applicants, employees, former employees, volunteers,
independent contractors, or government agencies such as the EEOC (Equal
Employment Opportunity Commission) can make these types of claims.

Employment Practices liability insurance can include coverage for legal defense
and expenses from lawsuits for:

  • Hostile work environment
  • Sexual harassment or discrimination
  • American Disabilities Act (ADA) violations or failure to make accommodations
  • Demotion or discharge of any person or wrongful termination
  • Wrongful failure to employ or promote
  • Wrongful discipline or negligent evaluation
  • Libel, slander, or defamation of character
  • Invasion of privacy
  • Breach of employment contract
  • Wrongful failure to grant tenure

Your Policy

Your coverage will vary based on the insurance company providing the coverage,
since there is no standard EPLI policy.   Most policies, however,
provide coverage for defending the claim, as well as any settlements or
judgments up to the policy limit.  Coverage can include punitive damages,
back pay, or damages for emotional distress, or these coverages can be excluded.

Your policy can list all covered claims (Named Perils coverage) or only the
claims not covered (All Risk coverage). In the latter case, any
employment-related claim is covered unless it is specifically mentioned in the
contract. Some common exclusions include:

  • Punitive damages
  • Intentional wrongdoing
  • Bodily injury or property damage
  • Violations of certain employment-related acts, such as ERISA or COBRA
  • Claims arising from business downsizing, closings, or reorganization
  • Claims arising from strikes or lockouts
  • Claims for non-monetary relief, such as demands for reinstatement or reasonable
  • Claims against specific persons, such as volunteers
  • Class action suits

If you have a claims-made policy or prior acts coverage with a retroactive date,
coverage can apply to claims arising from conduct or incidents that occurred
prior to the effective date of your policy, as long as the claims are reported while your policy is in

If you have an occurrence policy or extended reporting period, coverage can
apply to claims that are reported after the policy ends, as long as the conduct
or incident occurred while the
policy was in effect.

Your Policies and Procedures

Your internal policies and procedures are likely to be considered in determining
your premium, as these are part of your company’s defense in any lawsuit. The
following list provides the minimum policies and procedures that you should have
in writing and implemented in compliance with local, state, and federal laws.

  • Anti-discrimination policy
  • Family Medical Leave Act (FMLA) and Equal Employment Opportunity Commission
    guidelines (EEO)
  • Complaint reporting procedures and a written grievance policy
  • Regular written performance evaluations
  • Employment at will
  • Sexual harassment policy
  • Communicable diseases policy
  • Accommodating the disabled in accordance with the Americans With Disabilities
    Act (ADA)

Note that you can be sued regardless of the size of your company. Whether
management learns of the situation at the time of occurrence or at the time the
claim is made, your company is still considered responsible.



What is the difference between “pay on behalf” and
“reimbursement” type Employment Practices Liability policies?

This insuring agreement is written to pay all claims on you behalf. The
difference is in how claims can be paid in the event of a loss. If the policy is
written to pay all claims the insurer must pay any covered judgment. Or the
policy may be written so that you have to pay the settlement and be reimbursed
by the insurance company.

How are defense cost paid in Employment Practices
Liability policies?

It’s important to know whether the policy provision for the cost of defending a
covered claim is within the Limits of Insurance or in excess of the Limits of
Insurance. If the insured is sued and the cost of defending that suit is being
deducted from the limit of insurance, the insured could have to pay part or all
of a judgment against him that would have been covered had the cost of defense
been in excess of the Limit of Insurance provided by the policy. It’s best to
have coverage that provides for the cost for defense in excess of the Limit of


For More Information Please Call Us at 425-771-6614