Employment Practices Liability Insurance

by CRS | Jan 23, 2018

It isn’t that big of a risk, right?

Allegations of sexual harassment, sexual assault, and discrimination based on race, sexual orientation, religion, and other beliefs are monopolizing our headlines lately between the events in the entertainment industry and proposed government policy changes. Aside of everyone’s personal opinions of current events, what does all of this convey to a business owner?

Perhaps it is best to do a quick refresher on what Employment Practices Liability Insurance (EPLI) is before getting into how big of a deal it really is. EPLI, according to the International Risk Management Institute is, a type of liability insurance covering wrongful acts arising from the employment process. The most frequent types of claims covered under such policies include: wrongful termination, discrimination, sexual harassment, and retaliation. It is important to understand that EPLI can not only insure acts against employees, but can also insure acts against a third party like customers.

Let’s get into some statistics that will press the importance of risk that every business owner (who has employees or customers) faces every single day they open their doors. A business who employs between 1-50 employees is more likely to have an EPLI claim than a Property or General Liability claim.

The average cost to defend an EPLI claim is around $150,000. The average EPLI claim settlement is around $200,000. These dollar figures don’t even account for reputational damage the business suffers, loss of staff productivity, or other hidden expenses. It is worth noting that not every allegation made against an EPLI policy goes the distance of defense costs and settlements. Every state will be set up a bit differently. Here in Colorado, the Department of Regulatory Agencies’ (DORA) Civil Rights Division will investigate acts of discrimination against any protected class. Because of this process, EPLI claims can sometimes be closed from lack of validity or strength of argument/allegation.

Are these wrongful acts simply happening more lately; or are victims becoming more apt to come forward when they feel they have been wronged? Regardless of your outlook, protecting your business against the actions of your management, supervisors, and staff is paramount and necessary.

CRS Insurance Brokerage understands that protecting your business from an Employment Practices Liability perspective is not solely accomplished by the introduction of an EPLI policy, but rather in addition to proactive and proven risk management techniques and procedures.

If your agent isn’t bringing these exposures up in conversation, perhaps you need to start having a new conversation.