Q: What is Employment Practices Liability Insurance and should I have it?

A: Employment Practices Liability Insurance (EPLI) provides coverage to employers against claims made by employees related to wrongful employment practices. This includes allegations of discrimination (based on age, race, gender, etc.), sexual harassment, wrongful termination, retaliation, breach of employment contract, and other workplace-related issues.

Employers should consider EPLI because lawsuits in this area are increasingly common and can be very expensive—even if the employer hasn’t done anything wrong. Legal fees, settlements, and judgments can quickly add up, and EPLI helps cover these costs. Having this insurance not only protects the company’s finances but also demonstrates a commitment to fair and responsible employment practices.

The requirements for obtaining EPLI can vary depending on the insurer, but here are the most common factors and documents they consider:

1. Company Information

• • Number of employees (full-time, part-time, seasonal)
  • Business size and industry type
  • Location(s) of operations

2. HR Policies and Procedures
   Insurers want to see that your company follows good employment practices. They may ask for:

• • An employee handbook
  • Anti-discrimination and anti-harassment policies
  • Procedures for handling complaints and disciplinary actions
  • Documentation practices for hiring, evaluations, and terminations

3. Claims History

• • A record of past or pending employment-related lawsuits or complaints
  • A history of prior insurance claims (if applicable)

4. Risk Management Practices
   Insurers often look more favorably on businesses that:

• • Provide regular training for managers and employees on workplace conduct
  • Conduct performance reviews and maintain proper documentation
  • Have a dedicated HR professional or department

5. Completed Application
   You’ll need to fill out an application form provided by the insurer, which may include:

• • Detailed questions about HR practices
  • Disclosure of any known incidents that could lead to a claim

Some insurers may also require a prior or existing general liability or directors & officers (D&O) insurance policy as a prerequisite or bundle EPLI with those coverages.