What Is EPLI Insurance & Do You Need It?
EPLI insurance is a policy that covers claims of workplace discrimination based on age, sex, race; wrongful termination; harassment; or failure to promote. Does your small business need EPLI? Find out more!
Employment practices liability insurance (EPLI) covers claims of wrongful acts by employers.
EPLI insurance helps ensure that your employees are happy, healthy, and safe by protecting your small business if workplace situations grow tenuous and an employee sues based on inappropriate employment practices.
Read on to learn more about this kind of liability insurance and whether or not your small business needs to budget for a policy.
Table of Contents
- What Is EPLI Insurance?
- Who Needs EPLI Insurance?
- How Much Does EPLI Coverage Cost?
- How To Get EPLI Insurance Coverage
- EPLI Insurance FAQs
What Is EPLI Insurance?
Liability insurance policies protect your small business when you encounter claims or lawsuits against your business. EPLI insurance is a policy that covers claims of workplace discrimination based on age, sex, race; wrongful termination; harassment; or failure to promote. Most policies will also provide assistance with legal and human resource needs, and help you design company policies that mitigate opportunities for workplace harassment and discrimination to occur.
Insurance companies, like Nationwide or Coverwallet, provide their clients with risk management tools like lessons on creating company culture, websites to host HR resources, and free legal advice.
What Does EPLI Insurance Cover?
EPLI insurance covers lawsuits and damages that arise from wrongful workplace processes. EPLI will cover the cost to litigate these claims, provide you with legal assistance, and help pay for damages. As with all insurance, if it is discovered you broke the law purposefully or set out to treat your employees illegally, your EPLI insurance will not help.
Here are the situations an EPLI policy will help you navigate in the event that you are sued:
- Discrimination in your hiring practices or workplace
- Retaliation against or intimidation of whistleblowers
- Wrongful termination of an employee
- Failure to promote or employ on a timeline that matches their peers
- Sexual harassment by employees of all levels
- Harassment of all kinds
- Invasion of privacy
- Negligent evaluations or lack of transparency about hiring and firing practices
What Isn’t Covered By EPLI Insurance?
An EPLI insurance policy specifically covers liability related to employment practices. Any other liability claim is excluded from this specific policy.
Here are some things an EPLI won’t cover:
- Employee injury or accident
- Property damage
- False advertising
- Bodily injury to a client
- Data-breach protection
Who Needs EPLI Insurance?
According to Insureon, the average EPLI claim is over $160,000.
Human resources and discrimination-related lawsuits often settle for large amounts of money. If you have employees, an EPLI insurance policy should be a must for your risk management plan. Without it, you will have to pay to settle these lawsuits out of pocket which could close your small business’s doors forever.
Large corporations and larger businesses have the luxury of extra funds and a legal department to deal with potential lawsuits resulting from employee practices. However, a small business without a hefty legal department needs another avenue of protection. If you purchase EPLI insurance, you may also receive legal and human resource help to navigate potential lawsuits alongside the actual monetary coverage.
Additional Types of Liability Insurance
There are many different types of liability insurance options for your small business. Each policy is designed to cover a specific area of need and claims that could arise. Here are the main liability insurance policies available:
|Insurance Type||What It Does||Who It's For|
Often called "slip and fall" insurance, this insurance protects your business from the threat of a lawsuit.
Directors & Officers Liability
This insurance protects the company and its directors from frivolous lawsuits.
A business with figureheads that could attract legal attention
Protects your business from the costs of a data breach or hacking or other cyber crimes.
Businesses that gather information about clients and store it online
Protects your buildings and things inside your buildings from damage and accidents.
Businsses with a physical property site and products located in those physical locations
Protects a business from a lawsuit related specifically to the product it sells.
Any business that manufactures, sells, or distributes a product
Pays your workers salary and medical bills in the event of an on-the-job accident or injury.
All businesses with one or more employees
If your business has to stop because of property damage, this will cover the cost of moving your business to a new location.
Businesses that need a specific location to keep open
Talk with an insurance expert to see which policies are right for your business.
How Much Does EPLI Coverage Cost?
Employment practices liability insurance isn’t cheap. While a general liability policy can cost you roughly a dollar a day to protect your business, most lawsuits involving employee practices are extremely costly and end with a substantial payout of damages. Without insurance, a business is unlikely to recover.
Depending on your insurance provider, you may be able to include EPLI insurance as an endorsement of your existing business owner’s policy (BOP). Bundling your policies in this way can save you money and your small business from costly insurance claims. Read more about general liability insurance policies and why we think every business should have one.
The price of your policy will come down to the following factors:
- How many people you employ
- Any prior lawsuits brought against your company
- Employee turnover rate
- What kind of standards and procedures you have in place at your company
EPLI insurance can cost small businesses under $1,000 – over $3,000 annually, depending on the factors listed above. The best way to keep your EPLI insurance rates low is to make sure claims don’t arise in the first place by eliminating issues of workplace discrimination. Educate your employees and supervisors about their rights and train your entire staff regularly in order to maintain ethical standards.
How To Get EPLI Insurance Coverage
The process of finding a great policy boils down to research. Knowing the averages for your industry and comparing competing rates will help you make the best decision for your business. Start with an idea of the risks your business might face and then come equipped to your first meeting with an insurance company with the knowledge of what type of coverage you need. Because EPLI insurance policies are technical and deal with many legal matters, don’t settle for the cheapest policy without doing research. Check insurers’ ratings and see if they provide extra help like legal or HR compliance advice.
When you meet with an insurance expert, discuss whether it is cost-effective to bundle your EPLI insurance policy with a BOP through insurance providers like Nationwide. If not, go shopping for the best policy! Sites like Coverwallet, Coverhound, and Insureon will comparison shop for you and walk you through the steps required to make an insurance purchase.