Employment Practices Liability Insurance
Facts and Information
What is Employment Practices Liability Insurance (EPLI)?
EPLI is liability insurance to help insure your firm when there is an allegation stemming from discrimination, harassment, or another type of wrongful conduct in the course of employment that is in violation of federal, state or local law, common or statuary.
What types of claims are specifically covered under EPLI?
Generally, three areas of employment practices are covered:
- Sexual harassment and hostile work environment claims
- Discrimination (sex, race, age, religion, nationality, family, disability and pay, etc.) claims
- Wrongful termination claims
Doesn't professional liability insurance cover employment-related claims?
Typically not. Most professional liability policies include an “insured vs. insured” exclusion precluding claims by employees against employers and partner/owners against partner/owners. Also, these types of claims are excluded under the definition of professional services because employees are not clients and are not receiving covered "professional services." Finally, there is often a specific employment practices exclusion in a professional liability policy.
Most business owners carry a Business Office Policy (BOP) with
Comprehensive General Liability (CGL) Coverage. Doesn't that cover
employment-related cases?
It should not be considered automatic that BOP and CGL policies will cover employment-related issues. Even with these policies in place, you should consider several obstacles when evaluating your firm’s potential exposure.
First, these policies are written on an occurrence basis with the intention to insure a particular event. This "occurrence" requirement raises the issue of whether an employment-related case is a sudden event which would be covered, or a continuous exposure to conditions, which would probably not be covered.
Secondly, BOP and CGL policies require losses to result from an unintended, unpredictable, or fortuitous event. Employment-related incidents often do not occur accidentally, but rather happen intentionally. While BOP and CGL policies cover bodily injury, humiliation and mental anguish typically are not included in the definition of bodily injury. Since most EPL claims involve injuries that are not physical, these types of claims are usually excluded. Most importantly, many BOPs and CGLs now have a specific employment-related practices exclusion "for claims arising out of or in the course of employment." Workers compensation policies generally treat work-related claims as bodily injury and do not address intangible emotional distress claims from employment practices claims. If you believe your current policy covers employment-related exposure, be sure to verify with your insurance advisor.*
The bottom line is that insurers will often raise "coverage" issues when presented with employment-related claims on non-employment practices liability insurance policies. At best, an insured may have to first seek a coverage decision before addressing the merits of the employment-related claim. This is the best reason to consider separate EPLI coverage for your specific employment-related exposures.
*AICPA Commercial Property and Liability Insurance Program.
In addition to suits from employees, some firms experience claims of discrimination from their
clients. Do any policies cover this type of complaint?
Some EPLI policies provide third party coverage. This feature specifically covers liability for discrimination and sexual harassment claims by clients, vendors, or other non-employees.
One or more of the CNA companies provide the products and/or services described. The information is intended to present a general overview for illustrative purposes only. It is not intended to constitute a binding contract. Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. All products and services may not be available in all states and may be subject to change without notice. CNA is a service mark registered with the United States Patent and Trademark Office. Copyright © 2009 CNA. All rights reserved.
Aon Insurance Services is a division of Affinity Insurance Services, Inc.: in CA, MN & OK, (CA License #0795465) Aon Insurance Services is a division of AIS Affinity Insurance Agency, Inc.; and in NY, AIS Affinity Insurance Agency.
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