Employment Practices Insurance
Employment practices liability insurance, known as EPL or EPLI, provides coverage to employers against claims made by their employees - current or former - alleging:
Discrimination (based on sex, race, age or disability, for example)
Harassment, sexual or otherwise
Other employment-related issues, such as failure to promote, deprivation of a career opportunity
The larger the employer, the more exposure they typically have to Employment Practices liability based soley on number of employees. However, small or new businesses are often the most vulnerable to employment claims as they lack a legal and/or human resources department or an employee handbook detailing the policies and procedures that guide hiring, disciplining or terminating employees. Nowadays, in a society that's increasingly litigious, many employers, big and small, choose to buy EPLI coverage.
As with all types of policies, there are many factors that go into the rating and pricing of coverage. For Employment Practices, such factors include number of employees, prior suits against you, percentage of employee turnover, whether you have written rules, policies and practices in place, etc... Coverage may be available from some insurers as an endorsement to the General Liability policy. Other insurers may offer it as a standalone policy. At the low end, a standalone policy with a $100,000 occurrence limit, can run about $130 annually. Higher limits are available. There's usually a "self-insured retention" limit (a deductible).
EPLI coverage is usually written on a "claims-made" basis. This means the incident resulting in the claim had to occur during the coverage period. Because employment claims often come months or even years after the alleged incident, your company might be vulnerable if your insurance coverage was dropped or if tail coverage (liability insurance that extends beyond the end of the policy period) wasn't purchased. Many insurers will usually offer free online materials aimed to educate their insureds on better protecting themselves and strengthening their workplace practices. These sometimes include sample forms and policies to adopt in your business, self-audit checklists, links to state and federal legal sources, and web-based training videos or quizzes that cover various situations that could result in an EPLI claim.
As with any liability policy, the biggest benefit to carrying the liability coverage is the legal defense the policy provides. Should an employee bring a suit against you that is comepletely baseless and without merit, you can still run up a sizeable legal bill in proving your innocence. For as little as $10-$12 a month, a small EPLI policy may prove to be a lifesaver for some small business owners.