Employment Practices Liability Insurance
How Employment Practices Liability Insurance Protects Small Businesses
Employment Practices Liability Insurance protects startups and small businesses from employee-initiated lawsuits alleging discrimination, harassment, wrongful termination, and other charges. Because such suits are increasingly common, Employment Practices Liability Insurance is essential for many small businesses.
One reason for the increase in workplace lawsuits is that legislation such as the Americans with Disabilities Act and the Family Medical Leave Act define specific protocol for employers. Those who violate these protocols, even unintentionally, put themselves at risk for a lawsuit. Employment practices coverage protects employers and their businesses from such suits.
Settlements from employment practices lawsuits can run into the millions of dollars, and even if a business owner is not found to be liable, the legal defense can be prohibitively expensive. What’s more, evidence in employment practices cases is often scant, meaning that a million-plus-dollar decision might be based on little more than “he said, she said” testimony from you and the person suing you.
When you invest in Employment Practices Liability Insurance as part of your overall risk-management strategy, you help safeguard your business assets and ensure that you will have the resources to defend yourself in the event of a lawsuit.
The agents at insureon have handled hundreds of real-life claims scenarios. Let our experts answer your questions and provide you with the Employment Practices Liability Insurance that protects your business from its unique set of risks.
Employment Practices Liability Insurance Explained
Employment Practices Liability Insurance protects your business and its managers, employees, officers, and directors against lawsuits brought by prospective, current, or former employees.
While directors’ and officers’ insurance policies offer liability protection against the actions of a company’s leaders, a standalone employment practices liability policy offers protection with fewer exclusions and limitations. Coverage from an Employment Practices Liability Insurance policy typically takes effect in response to claims that a person’s or group’s civil rights were violated or that they were unable to complete their work in a fair, acceptable environment.
Covered claims may include…
- Mismanagement of employee benefits.
- Sexual harassment.
- Wrongful termination of employment or an implied contract.
- Wrongful discipline or demotion of an employee.
- Slander or libel.
- Discrimination based on age, gender, religion, race, or other factors.
- Breach of an employment contract.
- Privacy invasion.
- Emotional or mental distress.
- Negligent decisions related to hiring, promotions, or compensation.
How insureon Makes Buying Employment Practices Liability Insurance Easier
Secure Quick, Convenient Coverage. You can expect to have a certificate of insurance just 15 minutes from the time you start your application for insurance.
Excellent Choice of Policies. We work with a variety of industry-leading insurance providers, and we send you multiple quotes so you can select the one that best suits your needs.
Expertise before You Buy. Our specialist agents are ready to answer your questions and ensure that the insurance you purchase covers you from all the risks your business faces.
Customized Coverage. When you work with insureon, you can expect a policy that’s tailored specifically for your business’s needs. That means you don’t pay for any extras that you don’t need.
KEY DETAILS ABOUT YOUR EMPLOYMENT PRACTICES LIABILITY INSURANCE
For small businesses and startups at all stages, insureon offers a range of Employment Practices Liability Insurance. Here are some key considerations that will help you understand your policy options.
Understanding “Claims-Made” Coverage
Employment Practices Liability Insurance is typically issued on a “claims-made” basis, which means a claim will only be covered if the incident in question occurred while your insurance policy was active AND your policy is still in force at the time when the claim is made. If you cancel your policy immediately upon finishing a contract, for example, and someone submits a claim against your business, your policy will not cover you, even if it was active at the time the incident occurred. In some situations, you may be able to extend a policy beyond its original end date.
Talk with an insureon agent for details about employment practices liability coverage.
How Your Premium Is Calculated
Your Employment Practices Liability Insurance cost will depend on your business’s size, industry, hiring and firing practices, employee turnover rates, and risk profile. You may be asked to share your written personnel policies with a potential insurer before you can receive a quote. A licensed insureon agent can help you locate coverage that fits your needs as well as your budget. Contact us for a quote.
Understanding Deductibles and Exclusions
Most employment practices liability policies include a deductible (that is, an amount you must pay out of pocket before your benefits begin). Any legal defense costs, judgments, or settlements would be included in the policy’s aggregate limits. What’s more, some policies limit coverage during mergers, acquisitions, or major staff reductions.
How to Choose the Right Coverage Limit
Employment Practices Liability Insurance generally comes with limits that range from $1 million to $25 million. In selecting the coverage limit that is right for your business, take the time to consider all possible worst-case scenarios for your particular line of work and insure accordingly. Contact us to find out how insureon’s team of experienced agents can help you complete a no-cost risk evaluation.
Your Insurance Company May Select an Attorney for You
BUSINESS PROTECTION TIPS
Implementing certain business practices can help minimize your risk for employment practices liability claims and may even reduce your policy premium. To manage your company’s risk, be sure to do the following.
Establish and document sound personnel policies and practices.
The best way to avoid employment-related claims is to establish written guidelines for personnel practices, review them with your entire team regularly, and enforce them when needed.
Keep an “open door” policy.
Assure employees that they can safely voice their concerns regarding your processes and practices, without fear of reprisal, and that any inappropriate activity reported will be investigated fairly.
Don’t cancel your coverage without talking to your agent.
Because Employment Practices Liability Insurance is issued on a claims-made basis, you will lose all coverage for future claims made, even if they are related to incidents that took place while your policy was still in force. Before you cancel, ask your agent about purchasing limited coverage for a specified extension period.