Employment Practices Liability (EPL) Insurance

What is Employment Practices Liability insurance and why do we need it?

Employment practices liability insurance is a type of liability insurance covering wrongful acts arising from the employment process. The most frequent types of claims covered under such policies include:

  • Wrongful termination
  • Discrimination
  • Sexual harassment
  • Retaliation

What else does Employment Practices Liability policy commonly cover?

In addition, it’s notable that Employment Practices Liability policies cover claims from a variety of other types of inappropriate workplace conduct, including (but not limited to) employment-related:

  • Defamation
  • Invasion of privacy
  • Failure to promote
  • Deprivation of a career opportunity

The policies cover directors and officers, management personnel, and all employees as insureds. The most common exclusions are for bodily injury (BI), property damage (PD), and intentional/dishonest acts. 

In fact, Employment Practices Liability insurance policies are written on a claims-made basis. The forms can contain “shrinking limits” provisions, meaning that insurer payment of defense costs—which are often a substantial part of a claim—reduce the policy’s limits.

This approach contrasts with commercial general liability (CGL) policies, in which defense is covered in addition to policy limits. Although Employment Practices Liability insurance is available as a stand-alone coverage, it is also frequently sold as part of a management liability package policy.

In addition to providing directors and officers (D&O) and fiduciary liability insurance, management liability package policies afford the option to provide Employment Practices Liability insurance as well

Why Employment Practices Liability coverage may often be overlooked?

Typically part of a Directors and Officers policy, Employment Practices Liability insurance is often under appreciated. It is notable that Employment Practices Liability Insurance insurance can be included in D&O coverage. To learn more about common insurance coverages visit our Insurance Info page.

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