Estimated reading time: 5 minutes
Employment Practices Liability Insurance (also known as EPLI) can be confusing for Small Business Owners. Many owners believe that they aren’t “big enough” to worry about an employee suing them
Other owners simply believe that their employees just “wouldn’t do that”.
You might have the best employees!
You probably wouldn’t intentionally do something that would cause an employee lawsuit.
However, it is the unintentional acts that can take away EVERYTHING you have worked hard for.
EPLI Insurance doesn’t have to be confusing! To navigate the North Carolina EPLI Insurance market, you need a trusted Advisor that can guide you through the coverage options and risks!
Do A Google Search for “epli insurance” and you will be bombarded with search results from LARGE insurance companies wanting to SELL YOU something.
We hope this EPLI Insurance Resource will help guide you to making the best decision for you, your employees, and your small business.
What Is EPLI?
EPLI Coverage is insurance that protects your business from lawsuits that arise from Employment Related Practices.
While most small business owners think that their employees would NEVER bring a lawsuit against them, the truth is that Employment Practices Liability Claims are one of the fasted growing claims over the past 5 years.
What Does Employment Practices Liability Insurance Cover?
Employment Practices Liability Insurance (EPLI) protects an employer from employees’ claims alleging such things as discrimination, wrongful termination, harassment (including sexual harassment).
EPLI pays for liability damages and defense costs due to these charges brought by full-time, part-time, temporary, seasonal employees, applicants for employment, recognized volunteers, and independent contractors.
Why Do I Need Employment Practices Liability Insurance?
A study in 2014 performed by Advisen showed that Small Businesses are at a greater risk for employee lawsuits than they imagine.
According to the study, companies with 100 employees or less can expect an Employment Practices claim once every 3 years, however only 23% of those small businesses purchases Employment Practices Liability Insurance.
Of those claims filed, 51% will result in a win by the plaintiff (the employee).
What Are The Most Common Types Of Employment Practices Lawsuits?
The U.S. Equal Employment Opportunity Commission classifies the various Employment Practices Violations as follows:
How Much Does EPLI Insurance Cost?
The average Employment Practices Liability Insurance (EPLI) premium is approximately $20 per employee, but that premium can vary greatly.
EPLI is most often added to a business’s Business Owners Insurance Policy, but can also be written as a stand-alone policy.
EPLI Premiums, for most insurance carriers, are based upon the following factors:
- Type Of Business
- Number & Type Of Employees
- EPLI Coverage Limits
- Whether Or Not Third Party Employment Practices Liability Is Chosen
Rating Factor 1: Type Of Business
Most businesses are eligible to purchase EPLI with “standard rates” and include some of the following:
- Physician Offices
- Retail and wholesale stores
- Machine shops and light manufacturing operations
- Auto repair garages
- Auto dealerships
However, most carriers find certain businesses to be higher risk, and will not offer Employment Practices Insurance, here are a few of those:
- Ambulance service, first aid or rescue squads
- Career and vocational consulting firms
- Employment agencies, including employee leasing firms and temp agencies
- Fire departments
- Government offices
- Private membership golf and country clubs
- Schools and camps associated with schools
Rating Factor 2: Number & Type Of Employee
Employment Practices Liability Insurance rates are typically presented and rated Per Employee.
Insurance Providers differentiate per employee pricing in accordance to whether of not the employee is considered “Full Time” or “Part Time”.
Full-Time employees offer a greater risk than part-time employees, so a full-time employee carries a premium higher than a part-time employee.
Rating Factor 3: EPLI Limits
Most insurance carriers offer the following coverage limits:
The higher the coverage limit, the higher the premium
Rating Factor 4: Deductible Options
Most insurance carriers offer the following deductible options
The higher the deductible, the lower the premium.
EPLI Third Party Coverage
EPLI Third Party coverage is an OPTIONAL Coverage for Employment Practices Liability.
Third Party EPLI provides coverage for charges brought by customers, vendors or clients.
You can expect an approximate additional premium charge of 15% of the base EPL premium