Termination Insurance

What Does Termination Insurance Mean?

In liability insurance, termination insurance is a type of business liability coverage that protects an employer in the event an employee sues the company for wrongful termination. Initially, wrongful termination insurance was included under regular business liability coverage, but it has since been issued separately under employment practices liability (EPL) coverage.

Insuranceopedia Explains Termination Insurance

Wrongful termination is one of the risks covered under the comprehensive employment practices liability (EPL) insurance, which protects employers from the financial consequences of employment-related lawsuits. This coverage includes lawsuits involving race or age discrimination, wrongful termination, sexual harassment, and disputes between employees and third parties. Because wrongful termination suits are usually not covered by a standard general liability insurance policy, employers typically need to add EPL as a separate line of coverage. Employers who wish to protect themselves from the financial burden of lawsuits filed by terminated employees should consider obtaining an EPL policy. Owners who are new to commercial coverage can start with an overview of business insurance to see where EPL fits within a full policy package.