Brown & Brown of Illinois

Employment Practices Liability Insurance: Are you covered?

Employment Practices Liability Insurance: Are you covered?

Employment Practices Liability Insurance: Are you covered?

EPLI -A type of liability insurance covering wrongful acts arising from the employment process. 

Every day, your business is at risk for a claim to be filed against your business by a past, present or potential employee. It can happen to ANY business big or small. It’s impossible to monitor every communication that encompasses the hiring, firing, daily interaction amongst employees and outside forces that influence a person’s behavior and actions. As a result an off color joke told in the lunchroom; someone that you had to write up for a performance issue, a potential employee you chose not to hire could all trigger a claim against you. Even if there is no merit to the allegations in the litigious world we live in, in reality anyone can sue anyone. Does your current insurance program provide coverage for the defense of such claims?

You might think that these are exposures covered under your “General Liability Policy” when in actuality rarely are they covered under a GL policy. General Liability policies are occurrence based policies and are triggered when an accident and a specific occurrence leading to “bodily injury or personal injury” losses occur as defined by the GL policy. Many of these types of claims do not constitute “bodily injury or personal injury” occurrences and are therefore excluded as claims “arising out of or in the course of employment”.

An EPLI policy can be tailored to fit the specific needs of your business and your exposures. EPLI can provide protection against lawsuits stemming from harassment, including sexual harassment, discrimination and wrongful termination, EEOC charges and more. EPLI policies look at the type and size and location of your business. They review the number of employees and how long you’ve been in business. They consider how many and the type of prior claims or lawsuits have been filed against the company and work then to protect your business and assets. The premiums vary but are generally affordable

Some additional statistics on EPLI claims and coverage:

An employer is more likely to have an employment claim than a property or a general liability claim.

Defense of an average EPLI case through trial costs more than $45,000 (varying by legal jurisdiction).

The average amount paid by an out of court settlement is $40,000.

The median compensatory award in EPLI Cases is $28,000.

67% of employment cases that litigate result in judgments for the plaintiff.

Source: Society for Human Resources Management

Most carriers as a benefit to their policyholders, offer free loss prevention services, Human Resources assistance, access to general legal advice, online training modules, and interactive websites to assist all in an effort to reduce claim costs and provide valuable insight to policyholders. This not only is of great benefit to the insureds that purchase the coverage but it may help to reduce the overall costs borne by the insurer should a claim that triggers coverage arise.

What should you do? Discuss the available options for coverage with your independent insurance agent. Know the potential risks and the cost to procure the policy to protect your business. Utilize the expertise of the agencies team members and make an informed decision.

Stacey Elders, CRIS

For more information on this and other risk management concerns, please contact a Brown & Brown of Illinois licensed insurance agent at 630-245-4600 or