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What is Employment Practices Liability Insurance (EPLI)?

As a business owner, it is important to ensure that you are protecting your business from financial issues.

There are many ways to do this, however, one of the best options will be to guarantee that you have the right coverage in place. It can be difficult for business owners to understand the different types of insurance coverage available.

One option that you should be aware of is Employment Practices Liability Insurance or EPLI. In this article, we’ll explore everything that you need to know about this option and why it could be important for your business.

What Is Employment Practices Liability Insurance?

When you are planning financial protection for your business you probably won’t consider the fact that a legal claim could come from inside the house but that’s exactly what could happen.

An employee could make a claim against your business if they feel that their legal rights have been violated by your business. There are numerous reasons an employee might make this type of claim. EPLI covers your company from this type of claim from an employee.

It’s possible that this could be part of your business owners policy from your insurance provider. Alternatively, you can arrange EPLI as a stand-alone or separate type of coverage. This is largely going to depend on the individual financial requirements of your business.

Do be aware that the cost of EPLI coverage is going to vary depending on several factors. For instance, the cost can be higher if you have a higher number of employees or if there are risk factors connected to your business. For instance, your company could have been sued by an employee in the past.

This policy will cover a range of costs associated with a claim from an employee. You will be reimbursed for legal costs, including your defense, and for judgments and settlements.

The policy will also typically payout, regardless of whether you win or lose the case, however, it will not typically cover punitive damages. It’s also worth noting that liabilities covered through other compensation such as workers comp will be excluded.

What Does It Cover?

Employment Practices Liability Insurance provides protection for a wide range of different claims that could be put forward against your business.

It will protect you if an employee feels that they have been terminated for the wrong reasons or if they have been passed over for a promotion for reasons that do not relate to their work output. Many claims are tied to accusations of discrimination.

This can occur at the hiring stage or later on after they have worked at the company for several years. Sexual harassment claims have also been on the rise as of late and EPLI coverage can protect your business from the financial ramifications of this as well.

It’s important to note that as an employer you are responsible for the emotional wellbeing of your employees. This is just as important as protecting them physically while they are operating on your premises.

If you fail to do this and employees feel as though they are stressed or overwhelmed, then this could lead to a claim against your business. In other cases, employees may feel that you have breached the employment contract.

This is one of the reasons it’s worth appointing a legal advisor to ensure that your contract covers the right points and areas.

Why Is It Important?

It’s also worth noting that the number of claims like this being filed are on the rise. Employees are far more likely to take legal action if they feel they have been wronged by your business.

They are also far more aware of their rights as an employee and your responsibilities as an employer. If you do not take the right steps, then you will be leaving your business vulnerable.

While larger businesses can typically handle the expenses of the average employee claim it can be significantly worse for small and medium-sized companies. Indeed, it’s possible that damages from a claim like this can cost your business thousands that you won’t be able to afford in your budget.

EPLI coverage can protect you from this type of damage and guarantee that your company is not left vulnerable. Be aware it doesn’t matter whether an employee has a strong case. You will still need to cover the costs of defending your business if you don’t have this type of coverage in place.

What Type Of Businesses Require This Coverage?

You might think there are particular types of businesses that require this coverage.

However, the reality is that any business could be impacted by a claim made by an employee. So, it doesn’t matter what business you are running and what industry you are part of, protecting your business with this coverage is certainly advised.

It is important to take the right steps to protect your business from the possibility of this type of claim. There are many ways to do this. You might want to think about your hiring process. This can help you avoid a discrimination claim.

You should also guarantee corporate policies are clear and easy to understand for all employees. It is important that there is a structure in place that employees are aware of and that they can use if they have an issue with the way they are being treated in your business. =

The right support structure can ensure that employees don’t feel the need to make a legal claim. Make it clear that your company does not tolerate negative forms of behavior such as harassment and bullying.

You should also document and record any issues to ensure that there is an accurate account of what occurred in your business.

We hope this helps you understand everything that you need to know about Employment Practice Liability Insurance. If you need additional support or have further questions about your company in New Jersey, Central Jersey Insurance Associates can help.

We can discuss the insurance options available and guarantee that you have the coverage to give you full peace of mind.