Employment Practices Liability Insurance (EPLI) Guide

Employment Practices Liability Insurance (EPLI) is designed to protect businesses from financial losses arising from employee-related claims. Given the increasing risk of lawsuits related to workplace conduct and legal obligations, EPLI offers essential liability coverage for employers.

What EPLI Covers

EPLI typically protects against:

• Discrimination based on age, sex, disability, race, religion, or national origin

• Sexual harassment claims, including hostile workplace allegations

• Wrongful termination or retaliation, like firing someone who has raised legal concerns

• Breach of employment contract, such as failing to honor written or implied agreements

• Failure to hire, promote, discipline, or demote employees

• Emotional distress, defamation, invasion of privacy, or related reputational claims

• Mismanagement of employee benefit plans and employment practices

• Coverage may extend to third-party claims, such as harassment or discrimination toward non-employees (e.g., clients or vendors)

What EPLI Doesn’t Cover

EPLI generally excludes:

• Bodily injury or property damage claims (covered under general liability or workers’ comp)

• Employee injuries or illnesses — these require workers’ compensation or employer liability insurance

• Intentional wrongdoing, criminal acts, civil fines, or punitive damages

• Wage and hour disputes, unless specifically endorsed

• Unemployment benefits claims, union or labor disputes, or ERISA-related issues

• Claims from independent contractors or 1099 workers, unless the policy is tailored to cover them

How EPLI Works: Claims-Made Policies

Most EPLI policies are claims-made, meaning that coverage is only provided if both the incident and lawsuit occur while the policy is active.

• A retroactive date can be included to extend coverage back to earlier incidents.

• Policies without continuity can result in gaps in coverage, so maintaining continuous coverage is vital.

Why Your Business Needs EPLI

• Employee lawsuits are rising, especially involving claims of retaliation, which make up nearly half of all EEOC filings.

• Settlements and legal defense costs often exceed hundreds of thousands of dollars—even meritless claims can undermine small businesses.

• EPLI helps protect you from the emotional, financial, and reputational risks associated with employment-related litigation.

Risk Management & Preventive Practices

To control costs and improve insurability:

• Create a clear, written employee handbook outlining policies on discrimination, harassment, and disciplinary procedures

• Train managers and staff on legal responsibilities and respectful workplace behavior

• Follow complaints procedures promptly and document all actions taken

• Keep performance reviews, hiring records, and termination documentation well organized

• Ensure compliance with laws like ADA, FMLA, and anti-retaliation statutes

Strong workplace policies lower risk and improve eligibility for EPLI coverage.

Sample Cost & Coverage Limits

• Small businesses typically pay around $2,600/year in premium, though costs vary by size, industry, and claim history

• Policy limits commonly range from $100,000 up to several million dollars

• Add-ons (e.g. wage-and-hour coverage or third-party liability) may require tailored riders or broader limits

Summary Table

Call to Action

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