The reality is that any business faces employment-related claims as much as they do a property or general liability claim. If you work with people, your business is a candidate for employment practices liability insurance (EPLI) coverage. Offered on a stand-alone basis or combined with an existing policy, EPLI helps safeguard businesses against employee lawsuits alleging inappropriate or unfair acts. Even when done unknowingly, violating an employee’s (or contractor’s) rights can have devastating consequences. EPLI typically covers the legal defense fees and settlement costs or damages – up to the policy’s coverage limit – whether the employer settles, wins, or loses the case. If you have employees, vendors or customers, you should consider EPLI coverage. General liability insurance, unlike EPLI, will not typically protect your business from employment-related claims filed by your employees or vendors. Every employer, large or small, can be the target of legal action from past, present and prospective employees. Our licensed commercial insurance specialists can review these coverages with you so you can be confident that your coverages fit your business’s needs.
Employment Practices Liability Insurance (EPLI) – Frequently Asked Questions
- What is EPLI, and what does it cover?
Employment Practices Liability Insurance (EPLI) protects your business against claims made by employees (or former employees) related to wrongful employment practices. This includes allegations of discrimination, harassment, wrongful termination, retaliation, and more. - Who needs EPLI coverage?
Any business with employees—whether you have 1 or 100+—can be vulnerable to employment-related lawsuits. Small businesses are especially at risk because they often lack dedicated HR or legal teams. - What types of claims are covered under EPLI?
Common covered claims include:
- Sexual harassment
- Discrimination (race, gender, age, religion, etc.)
- Wrongful termination
- Retaliation
- Failure to promote or hire
- Hostile work environment
- Mismanagement of employee benefits
- Does EPLI cover lawsuits filed by former employees?
Yes. EPLI can cover claims made by past employees, job applicants, and—in some cases—third parties like vendors or customers who claim harassment or discrimination by your staff. - Is EPLI included in a general liability or BOP policy?
No. General liability covers physical injury and property damage, not employment-related issues. EPLI must be purchased separately or added as an endorsement to certain business packages. - Does EPLI cover legal defense costs?
Yes. EPLI helps pay for legal fees, court costs, and settlements or judgments—often even if the claim is groundless. This can be crucial, as legal defense costs alone can be financially devastating. - What isn’t covered by EPLI?
Common exclusions include:
- Criminal acts or intentional wrongdoing
- Wage and hour disputes (though some policies offer limited defense)
- Workers’ compensation claims
- COBRA violations
- Claims involving independent contractors (unless specifically endorsed)
- What steps can I take to reduce my EPLI risk?
- Have an employee handbook with clear policies and procedures
- Conduct regular anti-harassment and anti-discrimination training
- Document all disciplinary actions and employee performance
- Create a formal complaint process
- Stay up-to-date on employment laws
- How are EPLI premiums determined?
Pricing is based on your number of employees, industry, claims history, HR practices, and coverage limits. Businesses in high-risk industries (like hospitality, healthcare, or retail) may pay more. - What limits should I choose for EPLI coverage?
Many small businesses start with $100,000 to $1 million in coverage, depending on size and risk. An experienced agent can help assess your needs based on your headcount, turnover rate, and legal environment.
