Employment Practices Liability Insurance

Why do small businesses need EPL Insurance?

Small business owners are exposed to Employment Practices Liability (EPL) claims. In fact, small business owners may have greater exposure due to their limited Human Resource functions, lack of employment related policies, and use of part-time or seasonal labor.
Consider the following:

  • 52% of EPL complaints are field against small businesses.
  • Discrimination, wrongful termination, sexual harassment-these are just some of the charges that employees can file at any time.*
  • EPL insurance pays for liability damages and defense costs due to these charges brought by full-time, part-time, temporary and seasonal employees.

Are your clients aware of the potential challenges they face as a small business employer?
  • An increasingly more diverse workforce.
  • Economic pressures that may result in reductions in force.
  • Economic pressures that may result in reductions in force.
  • Expansion of regulation regarding discrimination, gender, and harassment claims.
  • State employments laws that apply to even the smallest employers.

What does an Employment Practices Liability claim typically cost an employer?
  • 81% of EPL claims are resolved for between $27,800-$52,200 including defense costs and liability damage payments.
  • 75% of claims are groundless, but will still need to be defended.
  • On average, defense costs alone are $10,000
  • This isn’t an exposure that a small business should self-insure. Given the risk, EPL coverage is a tremendous value.

EPL coverage has evolved from a high-priced option for large employers to an affordable necessity for all businesses. In today’s litigious climate, small business owners must protect themselves from damaging employment charges.

What’s included in the Employment Practices Liability Coverage form?

Coverage Limits:
Portfolio Coverage-Annual Aggregate Limit of Liability of up to $250,000 for all losses combined, including defense costs. Portfolio coverage is only available for insureds with 50 full-time equivalent employees or less. Referral Coverage- Annual Aggregate Limit of Liability options of $500,000 and $1,000,000 are available upon submitting a referral application to HSB. Limits are for all losses combined, including defense costs.

Deductibles:
Portfolio Coverage: Per Claims Deductible Options of $5,000, $10,000, and $25,000 are available. Referrals require an additional application.

Minimum Premiums:
This Coverage Endorsement is subject to a minimum premium of $50. The premium for this endorsement is in addition to the policy minimum premium.

Supplemental Extended Reporting Period:
A Supplemental Extended Reporting Period is available pursuant to the coverage terms. Terms may vary by state.

Punitive Damages Coverage:
Punitive Damages Coverage (where insurable by law) is an added feature to the new coverage form.

Optional Third Party Coverage:
Optional coverages for allegations brought by customers, clients or vendors may be purchased for additional premiums.

Our EPL form offers the following coverage features that are particularly important to small business owners:
  • Coverage for claims brought by applicants for employment.
  • Coverage for recognized volunteers.
  • Definition of employee includes part-time employees, temporary employees, seasonal employees, independent contractors and leased employees.
  • Coverage for claims brought by third party clients, customers, or vendors is optional.

To get a better understanding of EPL Coverage view claim examples here.