A Case For Compulsory Employment Practice Liability Insurance

To avoid the risk of being sued, many companies are using employment practice liability insurance or EPLI.

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This insurance is similar to regular liability insurance such as professional liability insurance but it has a few small but important differences. Typical business insurance won't protect your company from many different things such as termination and employment disputes, harassment, and similar issues. The main focus of employer liability insurance is to protect the employer from its employees. This is a necessary evil in this day and age where many people are just waiting for an opportunity to start a lawsuit. If you just turn on your local news, very often you will see a headline story regarding someone who was discriminated against or harassed in the workplace. This is a very common phenomenon and costs companies much time and money.

Employment practice liability insurance protects a company from being liable for anything dealing with employment practices. This is important for a business of any size but can drastically affect a smaller business. Recently, a Philadelphia jury deliberated and in less than an hour awarded an employee $200,000 for pay, $100,000 on the issue of emotional distress, and over $250,000 for attorney costs. This all started due to allegations that a supervisor was making slurs over that employer's homeland. The total number of employees who worked for this business was just 15. This is an incredible amount of money for a small business to have to pay and has the potential to bankrupt the company.

Nearly 75% of all lawsuits against businesses are over employment disputes and the average amount the company is required to pay is over $250,000 when including judgment decisions, court costs, attorneys, and fees. This has forced employers to develop strategies to proactively deal with or avoid this type of dispute. Employment practice liability insurance helps protect businesses of all sizes from these types of litigations. No plan is guaranteed to avoid this, but it can help reduce the frequency.

The costs for employment practice liability insurance will depend on the type of business. If the business has thousands of employees, it will pay a much higher premium than a smaller company that has just a handful of employees. There are many different companies that offer this type of insurance and you may be able to find some that are geared toward your specific type of company. The specialized companies may offer discounted plans or additional benefits.

Employment practice liability insurance is a necessity and is in addition to other types of business insurance such as pProfessional liability insurance. It covers so many other areas that general insurance does not, that it should be compulsory. One day it might be!