The Basics of Employment Practices Liability Insurance: What You Need to Know

The Basics of Employment Practices Liability Insurance: What You Need to Know

 In Employment Practices Liability Insurance
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It’s imperative to have a plan for mitigating losses associated with employee-related claims. For example, depending on the size of your company, the average employee complaint settlement can average between $40,000 and $300,000, highlighting the importance of employment practices liability insurance (EPL).

Explore EPL (Employment Practices Liability) insurance – understand its definition, significance, and the advantages it can provide your business.

WHAT IS EMPLOYMENT PRACTICES LIABILITY INSURANCE?

Employment practices liability coverage is a form of business insurance that aims to reduce financial losses if your organization encounters an employee-related lawsuit. For example, we design policies like this to potentially offset the expenses associated with lawsuits related to situations like: 

  • Wrongful termination
  • Discrimination
  • Sexual harassment
  • Job applicants alleging wrongful hiring practices 
  • Wage disputes
  • Customer complaints 
  • Breach of employment contract
  • Failure to employ or promote
  • Wrongful discipline
  • And other qualified employment practice claims

The average employee complaint settlement can average between $40,000 and $300,000.

WHAT DOES EMPLOYMENT PRACTICES LIABILITY INSURANCE COVER? 

Like any insurance, your company’s risks, size, employee portfolio, and other considerations determine the coverage. In most cases, we design policies that seek to reimburse a policyholder’s legal costs, settlements, and judgments associated with the situations noted above and others included in the underwriting. 

DO I NEED EPL INSURANCE? 

Yes. The unfortunate news for business leaders is that we’re seeing a rise in class-action lawsuits in the U.S. Consequently, claims are increasing, and more companies are encountering class-action lawsuits, given the increase in employee-related cases. 

Here are a few employee-related lawsuit statistics to further contextualize the importance of employment practices insurance: 

  • Approximately 5% of companies with over 100 employees encountered lawsuits related to workplace discrimination. 
  • Annually, American employers incur over $750 million in litigation expenses related to employees.
  • Companies in the U.S. have a 12% chance of facing employment discrimination lawsuits each year.

Unfortunately, only 3% of small businesses enroll in employment practices insurance, leaving those companies at the highest risk of financial distress. What’s more, most states require a business to have coverage that limits legal penalties and monetary damages should an issue surface, making it more imperative for folks without protection. 

Should you need coverage, we encourage you to meet with a professional insurance partner to discuss your options.

Every year, American employers incur over $750 million in litigation expenses related to employee litigation expenses.

WHAT ARE THE BENEFITS OF EMPLOYMENT PRACTICES LIABILITY INSURANCE?

Beyond meeting state requirements, the primary reasons most of our partners enroll in employment practices insurance align with its benefits. Those include: 

  • Financial savings: Insurance like this may offer financial protection in the event of legal disputes, including potential reimbursement from settlements and other judgments. 
  • Fortifying legal support: Having a policy that may offer financial reimbursement against judgments, settlements, and other employee-related lawsuits. 
  • Staying legally compliant: Local labor laws often require a business to have employment practices liability insurance.
  • Employee protection: Insurance like this may offer employees peace of mind while aiding in retaining top talent by fostering a sense of security within the workforce.
  • Training and Resources: Some policies offer risk management services, including training programs and resources to help employers create a more inclusive and respectful workplace.

HOW MUCH DOES EMPLOYMENT PRACTICES LIABILITY INSURANCE COST? 

Various considerations determine the price or premium of your employment practices liability insurance. Therefore, scheduling a consultation with an insurance expert is the best way to find affordable coverage. 

In addition to other inquiries, we typically ask our partners the following business-related questions when offering a quote:

  • How many employees do you have? And what type of employees are they? 
  • Where are you located? 
  • What are your turnover rates? 
  • Can you tell us about your claims history? 
  • How do you document your employee training exercises? 
  • How do you prevent discrimination and harassment? 
  • Can you illustrate what your hiring and firing processes are like? 

EPL INSURANCE CAN HELP PROTECT YOUR BUSINESS

Our goal is to ensure every business can get the coverage they need. We’re here to assess your risks and determine the best path forward toward finding a policy tailored to your needs. 

Learn more about our insurance solutions by contacting us online or call us directly at 800.735.8325 and we’ll follow up with more information. 

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