If you’re running a business, whether it’s a small family-owned restaurant or a giant tech corporation, you run the risk of having a claim filed against you. Business owners in the US encounter many employee liability risks on the daily, and few are ready to cover the costs that accompany them.
According to the 2017 Hiscox Guide for Employee Lawsuits, the average cost for an employee lawsuit is around $160,000, but many are much higher than this. Not a lot of businesses would be able to afford this payment out of pocket without losing their financial stability. This is where an Employment Practices Liability Insurance (EPLI) policy can come in quite handy.
It’s an often overlooked, yet essential policy that can protect your business from significant financial losses. At Melton McFadden, we’re happy to connect you to a variety of EPLI coverage options, so your small business can always stay afloat.
What Is EPLI Insurance?
EPLI insurance is designed to protect businesses from claims filed against them related to the employment process.
If employees feel that they’ve been mistreated or discriminated against during this process, they can file a lawsuit against you. This happens more often than many business owners would like to believe.
These claims can be filed by current, former, and potential employees, and are often directed to officers, directors, or management personnel.
Although many are under the impression that only large enterprises fall victim to such claims, the targets are much more commonly smaller businesses. The reason behind this is that larger firms are often better prepared to handle any type of lawsuit. They have experienced legal departments and written policies and rules that outline the entire hiring and termination process.
The fact that small businesses are rarely armed by all of these makes them much more vulnerable to employment-based lawsuits. EPLI insurance aims to protect businesses from the harmful repercussions of such claims.
EPLI Coverage
EPLI is typically provided as an endorsement to a Business Owners Policy (BOP) or a General Liability Policy. EPLI coverage will vary from one insurance provider to another, but you can generally expect to be covered for wrongful claims made against you for:
- Discrimination
- Sexual harassment
- Wrongful termination
- Employee retaliation
- Defamation
- Failure to offer promotion opportunities
- Poor evaluation
Under an EPLI policy, all directors, managers, officers, and employees should be covered. With EPLI insurance, all legal and attorney fees should also be covered.
Since this type of insurance is created on a claims-made basis, you’ll receive coverage only if the claim is filed during the coverage period. What this means is that even if the incident occurred during the coverage period, if you don’t have insurance when the claim is filed, you’ll receive no coverage.
There are some other EPLI coverage limits that you should be aware of. You’ll need to check with your insurance provider to see what the exclusions to your specific policy are, but you shouldn’t expect to receive coverage for property damage, bodily harm, and purposefully wrongful acts.
This is why all business owners need to be fully acquainted with the US Labor Laws. EPLI policy will not provide coverage if you fail to oblige with these laws.
Small Business EPLI Quote
EPLI policies are affordable for many small businesses. An EPLI endorsement to an existing BOP insurance or general liability insurance is often the most affordable choice.
The cost of your EPLI policy will depend on a few factors:
- The size of your business
- The number of employees you have
- Your employee turnover rates
- Past claims and lawsuits filed against your company
- Existence of established rules and policies
Melton McFadden can help you with an exact EPLI quote as many factors need to be taken into consideration. Each business will receive a quote that’s in line with its needs and unique circumstances.
EPLI Policy Vs. EBLI Policy
Due to the similarities in the abbreviations used, EPLI and EBLI policies are often confused for one another. However, they are entirely different policies that offer protection against different things.
As mentioned, the EPLI insurance offers coverage for employment-related claims that are filed against you. EBLI, or Employment Benefits Liability Insurance, provides protection in case of administrative errors regarding employee benefits.
In case there’s a mistake with enrolling an employee or their family members with health insurance, or in case you don’t describe the benefits coverage clearly, and an employee files a claim against you, you’ll be covered by EBLI.
Benefits of Having an EPLI Policy
Any business owner can benefit from having EPLI. Even if you have just a single employee, a lawsuit filed by them can cause financial ruin to your small business. Not to mention that the lawsuit will result in damage to your business’s reputation, which can be very detrimental.
EPLI is affordable, and its coverage is extensive. The protection that it provides is incalculable as it’s not only the financial assets that you’ll protect but your brand name and reputation as well.
Melton McFadden EPLI Insurance
Melton McFadden is the most trusted insurance provider in Michigan, and our extensive EPLI insurance will keep your business protected on all fronts.
Contact us to learn about everything that our EPLI coverage entails, and to see the specific coverage and exclusions that you can expect.
Protecting your business from lawsuits and claims is never pleasant, but at least you can rest easy knowing you have an EPLI policy to cover your back!
