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Employment Practices Liability

Employment Practices Liability (EPL) covers organizations for employment-related losses.  Coverage is triggered based on the policy’s definition of an Employment Practices Act.

The most common definitions include:

  • Sexual harassment
  • Discrimination
  • Wrongful termination
  • Breach of employment contract
  • Negligent evaluation
  • Failure to employ or promote
  • Wrongful discipline
  • Deprivation of career opportunity
  • Wrongful infliction of emotional distress
  • Retaliation
  • Violation of any federal, state or local civil rights laws

EPLI: Common Coverage Gaps

Retroactive Date Gap

When switching from carrier to another, be sure the Retro date is matched by new carrier.

Underinsured

Defense costs can mount very quickly with any type of management liability claim.  You have the option to buy a policy with defense costs outside the limit of liability.  This is often advisable unless you’re on a very tight budget.

Defense costs on a serious claim can easily reach $500K to $1M which may not leave much for the settlement or judgement if you only carry $1M limit.  This could also be an issue if you have more than one claim in a given year.

Definition of Employment Practices Act

The most common coverage gaps exist in the definition of Employment Practices.  There are so many instances of claims which can arise, so it’s advisable when comparing policies, to buy the one with broadest definition even if premiums are a bit higher.

When it comes to Management Liability, even more so than other policy types, you really do get what you pay for!