Why Do Businesses Need EPLI Coverage?

When it comes to protecting a business against potential legal issues, such as employee lawsuits, companies need to be proactive in securing the proper insurance coverages. The costs associated with claims brought on by employees can be staggering and can even put smaller companies out of business. With Discrimination lawsuits on the rise, opting for coverage, such as Employment Practices Liability insurance, business owners can rest assured knowing their operations are protected. Here’s a closer look at what Employment Practices Liability Insurance (EPLI) is and why it’s important for companies to invest in it.

What is EPLI Coverage?

EPLI is a type of liability insurance covering wrongful acts coming out of the employment process. The most frequent types of claims covered under this type of policy include wrongful termination, discrimination, sexual harassment, and retaliation. Furthermore, the policy covers claims from a variety of other kinds of inappropriate workplace conduct from supervisors and directors, including defamation, invasion of privacy, and negligent evaluation.

An EPLI policy provides protection for directors and officers, management personnel, and employees as insureds. The most common types of exclusions are for bodily injury, dishonest acts, and property damage.

With this information in mind, it’s important to look at certain situations that would call for this kind of coverage to be necessary. Here are some reasons why businesses need EPLI coverage.

Employee Lawsuits Are Growing

As noted above, employee lawsuits are seeing a major increase. In the last 10 years, employee filing with the Equal Employment Opportunity Commission (EEOC) has seen a 20-percent increase. In light of the #MeToo movement, which sparked a firestorm of filings after the fall of 2017, companies have needed to opt for stronger insurance measures to make sure their executive officers and future operations are protected from costly legal issues.

Settlements Are More Expensive

Settlements go hand-in-hand with lawsuits brought on by harassment or discrimination. Not only are the number of employee lawsuits on the rise, but the amount of money paid out as a result of these lawsuits is simultaneously increasing. The average settlement for employment practice claims is now estimated to be more than $70,000. For a small business, or one operating on limited margins, this could mean closing its doors for good.

Even Innocent Means You’re Guilty

Even for businesses that end up on the better side of a verdict, a dismissed lawsuit does not mean things will go back to normal. As a result, innocent businesses that gain attention for being involved in discrimination lawsuits can take a hit to their reputation, which could result in less business and customer trust in the future.

Current Policies Probably Don’t Cover Enough

Most businesses think that having a commercial policy covers everything in one umbrella-type of policy. However, this couldn’t be further from the truth. Commercial liability policies usually don’t cover EPLI claims. It’s important for business owners to understand that EPLI coverage is a necessary step to take when looking to protect not only their employees but their future business and reputation as well.

About Mavon Insurance

At Mavon Insurance, we pride ourselves on our unique approach to insurance. We focus on integrity, communication, professionalism, respect and gratitude to help our clients succeed, and place business in specialized markets. For more information about our products, or to become an agent, contact us today at (855) 248-1480.