Employment Practices Liability Insurance

Updated: 29 February 2024

What Does Employment Practices Liability Insurance Mean?

Employment practices liability insurance (EPLI) covers a business for claims made by an employee such as wrongful termination or discrimination. This insurance gives assistance to the insured in mounting a defense against a claim, or it may also pay for damages because of a claim honored by a court of law. This insurance is either a part of a policy such as general liability insurance or a separately bought policy.

Insuranceopedia Explains Employment Practices Liability Insurance

Most big companies have employment practices liability insurance as an endorsement of their liability policy, or they have bought it separately. They do so because not only are damages from successful claims made by employees quite expensive, but so are the legal proceedings involved in a defense. Many insurers, on the other hand, stipulate that the insured must first negotiate with a claimant for settlement before proceeding with a legal action, so as to lessen the insurance money paid out for damages and legal defense. As a precaution against future claims, the insurer might also suggest creating a detailed employment guidebook, effective monitoring of employees' performance and other employer-protection measures.

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