The Increasing Need for Employment Practices Liability Insurance
If you ask most business owners if they have Employment Practices Liability Insurance (EPLI), chances are they’ll tell you they’re not sure if they do. Its most certainly not for lack of being interested in how their business is being protected – but most likely, because they aren’t aware of what EPLI is and the coverage it affords them.
What is EPLI?
Employment Practices Liability Insurance (EPLI) is an investment that is highly recommended to businesses due to a variety of reasons, including:
- Increasing Settlement Costs: With the higher frequency of lawsuits being filed, the cost to settle a lawsuit has also increased, with the average cost being approximately $70,000. This cost fluctuates on a case-by-case basis, but most businesses cannot afford to settle without proper insurance policies to help.
- Increase in Lawsuits: More employees are filing claims of harassment and discrimination, and the frequency of lawsuits has increased steadily over the years. Having proper insurance in place can prepare your business before such a case is filed against you.
- All Company Sizes Can Be Affected: No matter the size of your business, such lawsuits can hit your business and increase the risk of your business struggling financially afterward. EPLI is essential in keeping companies of all sizes protected.
Some business owner’s policies offer a limited amount of EPLI coverage. But once those limits are met for defense against a lawsuit or paying a claim, the business owner is responsible for any costs that exceed that allotted amount. It is for this reason, that it does not hurt for a business owner to consider having an additional EPLI policy for their business.
Our business insurance firm provides commercial insurance and commercial auto insurance to protect companies throughout Goshen, Middletown, and Warwick, NY.
What Does EPLI Cover?
EPLI covers claims made by current, former, and prospective employees, as well as customers and vendors that work with your business.
First-party claims are made by employees against their employers for reasons including, but not limited to:
- Harassment of any type
- Wrongful termination
- Discrimination based on age, sex, race, pregnancy, disabilities, etc.
- Denial of sick leave or adjustments in an employee’s duties
- Guidelines listed under the Fair Labor Standards Act (FLSA)
Third-party claims are made by a customer or vendor of your business, who have alleged one of your employees has discriminated against them in some way.
This includes alleged violations of the guidelines established by the Americans with Disabilities Act (ADA) and the Federal Housing Act (FHA).
What Type of Business Needs EPLI?
While this might sound like the kind of coverage only a large business needs, insurance companies report* increasingly more need for small to medium sized businesses to carry EPLI based on the amount of claims they receive.
Some businesses that commonly benefit from carrying additional EPLI include, but are not limited to:
- Restaurants
- Retail shops
- Contractors
- Professional offices
Is EPLI Right for Your Business?
You don’t have to evaluate your exposure to this type of risk alone. Don’t hesitate to call our team at J. Hoffman Insurance to discuss your business and get a review of your current coverage. We would be happy to walk you through what your policy currently entails and guide you on what would be in your best interest moving forward. You can reach us our Commercial Lines team at (845) 239-4787 or Jason@jhoffmaninsurance.com
*Source: Nationwide® Insurance
https://static.nationwide.com/media/epli-employee-lawsuits-accessible_tcm826-259059.pdf?r=14
