Employment Practices Liability Insurance

What Does Employment Practices Liability Insurance Mean?

Employment Practices Liability Insurance (EPLI) provides coverage for a business against claims made by employees, such as wrongful termination or discrimination. This insurance helps the insured defend against such claims and may also cover damages awarded by a court. EPLI can be included as part of a broader policy, such as general liability insurance, or purchased separately as a standalone policy. Because employment claims can touch on a wide range of workplace issues, EPLI is often bundled with other coverages that fall under business insurance, which most employers carry to protect against everyday operational risks.

Insuranceopedia Explains Employment Practices Liability Insurance

Most large companies have Employment Practices Liability Insurance (EPLI) either as an endorsement to their liability policy or purchased separately. This is because damages from successful employee claims can be very costly, as can the legal proceedings involved in defending such claims. Companies that don’t already have EPLI bundled into a broader policy sometimes add it alongside their general liability insurance once their headcount grows past a few employees. Many insurers, however, require the insured to first attempt settlement negotiations with a claimant before proceeding with legal action in order to minimize the insurance payout for damages and legal defense. As a precaution against future claims, insurers may also recommend creating a comprehensive employment guidebook, effectively monitoring employee performance, and implementing other employer-protection measures.