PL Risk Advisors provides employment practices liability insurance, also known as EPLI, to their agency partners for their clients that can benefit from this vital coverage. One major benefit it offers to businesses is that it covers liability for a broad spectrum of claims brought against these companies in relation to their employment practices. While many claims levied against corporations are found to be false, fraudulent, or frivolous, it can still be a costly burden to prove this in a court of law.
Again and again, many employers find themselves being forced to cut back on their labor force, which is often an indicator that employees, suddenly finding themselves without a job, claim this was in fact due to employment discrimination. Unfortunately, employers are currently facing ever-increasing exposure to claims related to their employment practices, and this policy covers this exposure.
Many benefits of having EPLI
Many years ago the insurance industry developed EPLI policies, written specifically to address employment-related liabilities. The policies typically cover the full range of potential employment-related claims, which includes anything from wrongful disciplinary actions to harassment to retaliation by supervisors or other employees.
In addition, since claimants can generally pursue their claims whether or not such claims have any merit, in both the administrative and judicial forums, a major advantage of EPLI is coverage for all legal fees, from administrative proceedings through lawsuits in state or federal courts. However, one important factor to keep in mind is that legal fees are typically included within and may substantially reduce the policy limits.
The advantages of a claims-made policy
Most PL Risk Advisors will tell you that EPLI polices are written on a claims-made basis, as opposed to “occurrence”. This means the policy will provide coverage only if the claim is made and reported during the policy period. For instance, if an employee of one of your clients files suit in 2014 because of a demotion that occurred in 2012, the policy that covered the 2014 period will respond to the claim.
However, urge your client to review whether the policy contains extended reporting period or retroactive date provisions. An extended reporting period provision extends coverage for claims made and reported during the extended period, so long as the claim is related to a wrongful act that occurred during the policy period.