EPLI
Employment Practices Liability Insurance covering claims by employees alleging wrongful termination, discrimination, harassment, or other employment violations.
What It Is
Employment Practices Liability Insurance (EPLI) protects employers against claims made by current, former, or prospective employees alleging violations of their employment rights. Covered claims include wrongful termination, discrimination (based on race, gender, age, disability, religion, etc.), sexual harassment, retaliation, failure to promote, breach of employment contract, and other employment-related torts.
EPLI is typically written on a claims-made basis and covers defense costs plus damages, including settlements and judgments. Most EPLI policies provide defense within the limit (eroding), though some offer defense outside the limit. Policies may also cover regulatory proceedings by the EEOC, state fair employment agencies, and Department of Labor.
EPLI coverage has expanded in recent years to address emerging employment issues including social media-related claims, workplace bullying, and claims related to remote work arrangements. Some policies now include third-party coverage (claims by non-employees) and wage and hour defense cost coverage.
Why It Matters for Brokers
Employment claims are among the most common lawsuits faced by businesses of all sizes. The average EEOC charge costs $75,000 to resolve, and jury verdicts in employment cases regularly exceed $500,000. The CGL does not cover employment-related claims, and many D&O policies have EPLI exclusions. Standalone EPLI is essential for every business with employees, yet many small and mid-size businesses do not carry it.
Real-World Example
A 50-employee company terminates a sales manager who then files an EEOC discrimination charge and a wrongful termination lawsuit claiming age discrimination. Defense costs through trial: $210,000. Jury verdict: $475,000 (including $200,000 in punitive damages). Total: $685,000. The CGL denies the claim (employment exclusion). The D&O denies (EPLI exclusion). Without EPLI, the company pays $685,000 from operations. With a $1M EPLI policy (annual premium approximately $5,800 for a 50-employee company), the entire $685,000 is covered.
Common Mistakes
- 1Not recommending EPLI for small businesses, assuming employment claims only target large employers—businesses with 15-100 employees are actually the most frequent EPLI claim targets.
- 2Assuming the D&O policy covers employment claims without verifying—many D&O policies specifically exclude EPLI claims.
- 3Not including third-party EPLI coverage for businesses with significant customer or vendor interaction where harassment or discrimination claims may come from non-employees.
How brokerageaudit.com Handles This
brokerageaudit.com's Policy Checker verifies EPLI coverage for every commercial account with employees and flags accounts missing EPLI. The system identifies high-risk EPLI factors (employee count, industry, turnover rate, prior claims) and recommends minimum limits based on these risk factors. The Submission Intake captures employment practices details including HR policies, employee handbooks, and training programs that can improve EPLI underwriting results.