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Employment Practices Liability Insurance

QUICK SUMMARY

Employment practices liability insurance (EPLI) has become increasingly important for employers since the recent recession. The types of lawsuits and claims related to employment issues that EPLIs cover—like workplace discrimination, wrongful termination, and lack of compliance with the federal Family and Medical Leave Act (FMLA)—have seen a big rise post-2007. And the costs of addressing these claims without an adequate risk protection strategy can be crushing for small businesses.

Protects Businesses from Employee Litigation

EPLI, also known as employment liability insurance, is a policy that covers businesses when an employee files a complaint with the Equal Employment Opportunity Commission (EEOC) under federal laws such as Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, and the Age Discrimination in Employment Act.

Most Business Owners’ Policies (BOPs) do include employment practices liability as part of their broad liability coverage. But the typical limit for this kind of claim under a BOP is $10,000, which wouldn’t go far in today’s litigious climate. The cost of your legal defense is included as part of EPLI coverage, along with any settlements and judgments that may be found against your business.

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Risks and Exposures Scenarios

The damages awarded to victims of employment discrimination can vary according to the type of complaint, the severity of the discrimination, and even the number of people you employ.

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