Running a business can be highly rewarding, especially with a dedicated staff. However, with rewards come risks, and employees are inherent risk factors. As companies increasingly face lawsuits for issues like discrimination and wrongful termination, EPL Insurance is no longer a beneficial option—it’s an absolute business necessity. But what is EPL Insurance, and how does it protect your business clients?
With the growing awareness of employee rights and stricter regulations, EPL Insurance coverage offers essential protection. It allows businesses to focus on growth and operations without the constant fear of costly legal battles. Having this coverage is a strategic move that helps safeguard a company’s future.
What Is EPL Insurance?
EPL Insurance, or Employment Practices Liability Insurance, covers businesses for financial losses from employment-related lawsuits. It addresses a broad spectrum of claims that can arise in the workplace. Understanding what EPL Insurance is as well as its scope is crucial for any business owner.
Common EPLI Claims
EPL Insurance coverage includes protection against various employment-related claims, such as:
- Discrimination Claims: These involve allegations of unfair treatment based on race, gender, age, religion, or disability. For instance, if an employee believes they were passed over for a promotion due to their age, they might file a discrimination lawsuit.
- Sexual Harassment Claims: EPL Insurance covers claims related to inappropriate behavior or comments in the workplace. The claim could involve situations where an employee feels uncomfortable due to unwelcome advances or offensive remarks.
- Wrongful Termination Claims: If an employee is dismissed from their job under questionable circumstances, they might claim wrongful termination. EPL Insurance helps cover legal fees and settlements in such cases.
- Other Employment-Related Issues: This includes claims of breach of contract, emotional distress, invasion of privacy, and more. For example, if an employee alleges that their contract was unfairly breached, EPL Insurance would provide the necessary legal defense and cover associated costs.
What Does EPL Not Cover?
As an insurance broker, you should also be well aware of what EPL does not cover. Typically, it excludes:
- Criminal acts
- Workers’ compensation claims
- Violations of labor laws unrelated to employment practices
Clients might assume their policy covers all employee issues, so it’s essential to understand and explain the specific inclusions and exclusions to them.
How To Avoid EPL Claims
In 2020, the EEOC received 67,448 workplace discrimination charges, highlighting the importance of having strong policies in place. Help your clients avoid EPL claims by taking proactive measures.
Start by having them implement clear, written policies on discrimination, harassment, and termination. Regular training for employees and management on these policies further reduces claims.
Clients should establish a complaint process to investigate issues promptly. They should also regularly update HR practices to comply with current laws and promote an open and respectful workplace culture to cut the risk of costly EPL claims.
Encouraging clients to adopt these practices helps brokers manage a stable, low-risk portfolio and strengthens their role as trusted advisers.
Who Needs EPL Insurance?
If your clients have employees, they need EPL Insurance. Here’s a look at the type of businesses that benefit most from the coverage.
- All Business Sizes: Businesses of all sizes, from small startups to large corporations, should have EPL Insurance. Small businesses are particularly vulnerable because they often lack dedicated HR resources, making them prime lawsuit targets.
- High-Interaction Industries: Sectors with high employee interaction, such as retail, healthcare, and hospitality, benefit significantly from EPL Insurance coverage. These industries often face increased turnover rates and more frequent employee interactions, raising the likelihood of claims.
- Businesses With Strict State Regulations: Businesses operating in states with stringent employment laws may find EPL Insurance especially advantageous.
Keep in mind that an organization’s EPLI risk profile isn’t static. As your clients’ businesses evolve, you may need to help them adjust their coverage.
Benefits of EPL Insurance
You know what EPL Insurance is. Now, let’s look at the benefits.
Financial Protection
If your clients are hesitant about investing in EPL Insurance coverage, just ask them, “How much does the average EPL claim cost?” The answer should be enough to nudge savvy business owners into action. In 2020, the average out-of-court settlement for a discrimination claim was $75,000, and the average jury award was $217,000.
EPL Insurance covers legal costs and settlements, safeguarding businesses from crippling expenses.
Risk Management
EPL Insurance helps businesses identify and mitigate risks through access to resources and training. These tools are essential for preventing violations of employment practices, such as regular anti-discrimination and harassment training, which lowers the risk of claims.
Peace of Mind
Assure your clients that EPL Insurance provides peace of mind. Share testimonials or hypothetical scenarios showcasing how coverage has saved businesses from financial ruin during wrongful termination claims. This assurance allows business owners and managers to focus on growth rather than potential lawsuits.
Reputation Protection
With EPL Insurance, your clients can manage public relations and protect their image during legal disputes. For example, with coverage in place, a business can handle publicized harassment claims more effectively, mitigating damage to its reputation.
ProWriters Offers Comprehensive EPL Insurance
Protect your clients from costly employment-related claims with comprehensive EPL Insurance from ProWriters. Contact ProWriters today for a consultation and register for fast EPLI quotes through our Digital IQ Platform. Ensure your clients are covered and confident with ProWriters’ expert solutions.
