When running a business, you have the responsibility of ensuring that your employees are happy, safe, and healthy. However, sometimes thing doesn’t always go as planned. You might find yourself facing a lawsuit due to inappropriate employment practices such as employee discrimination, sexual harassment, or wrongful termination. That’s why it’s crucial to have an employment practice insurance policy to cater for the lawsuit.

What You Need to Know about Employment Practice Insurance

Unlike the which is mandatory, you have the option to leave out employment practice insurance. Many small business owners opt out of the policy with the assumption that:

• Employees will never sue them
• Workers compensation policy will cater for any lawsuits related to employment practices

The problem with this assumption is that it can cost your business a lot of money if you fail to uphold your responsibility and be fair to your employees. Here are five things you should know about employment practice liability insurance.

How Employment Practice Liability Insurance Differs from Other Insurances

Employment practice insurance protects you and covers any possible litigations arising from employee relationship gone sore. The policy covers claims made by current and former employees, those not hired, and third-parties on the basis that you conducted yourself in a wrong manner. EPLI policy covers a number of claims including:

• Invasion of privacy
• Sexual harassment
• Discrimination
• Wrongful termination, and
• Retaliation

EPLI is one of the several insurance offerings available to protect the employer from an array of employment claims. Some of these other policies are:

• D&O insurance policy which covers a company’s directors and officers
• Commercial general liability, CGL, policy which deals with wrongful employment practices, and
• Errors and omissions, E&O, which focuses on real errors and omissions that occur during the daily dealings of your business

At times, you may feel like EPLI overlaps with these other policies but it’s useful in exerting necessary force in the daily workplace claims.

Reporting a Claim

With employment practice insurance, reporting a claim doesn’t always affect the maintenance or renewal cost of the EPLI policy. Therefore, it’s wise to report a claim as soon as you become aware of it. However, you also need to assess the claim and determine whether it makes sense to claim it or not.

Do You Need an EPLI Policy?

As a business leader, you make important personnel decisions on a daily basis. From hiring new workers to assigning duties, each of your decisions affects employees in a unique way. Although these actions are critical to running your business, they also create exposures that could lead to costly claims by employees or governmental regulators.

Even if they are not warranted, claims for wrongful employment practices can disrupt operations, damage your business’s reputation, hurt employee morale and negatively impact your bottom line. What’s worse, even if a business fosters a welcoming work environment and takes all of the necessary precautions to safeguard its employees, it can still face an employment practices liability claim.

The decision to buy employment practice liability policy requires careful consideration and depends on many factors, not limited to:

• How much you’ll pay for the EPLI premiums
• The location of your business
• The number of employees
• The likelihood of a claim being filed against your business
• Availability of written preventative employment policies in your workplace
• History of losses and claims within your organization

To better understand the level of risk your business faces on a daily basis, we’ve developed a free downloadable Score card. After you have completed all of the sections of the scorecard, you be able to determine your level of risk by utilizing the key provided in the scorecard.

To get your free, no-obligation scorecard, simply complete the form and we’ll send you the scorecard.