How Much Does Employment Practices Liability Insurance (EPLI) Cost?

So, what does EPLI cover? In simple terms, EPLI protects a business against claims from employees related to various employment practices like hiring, training, performance reviews, policy enforcement, and termination. The scope of EPLI claims can be vast, including wrongful termination, discrimination, sexual harassment, retaliation, defamation, privacy invasion, failure to promote, breach of employment contract, negligent evaluation, and limited coverage for immigration and wage claims.

However, the potential damages from an EPLI claim, which can be influenced by the type of employment practice charge and the severity of discrimination, can impact future employment practices liability policy costs. It’s therefore crucial for businesses to understand the anatomy of EPLI coverage to effectively manage their insurance costs.

Understanding Policy Limits and Deductibles

Businesses have the power to influence their EPLI costs by adjusting their policy limits and deductibles. The average deductible that Insureon customers select for EPLI is $10,000, which directly impacts the cost of the premium. Selecting a higher deductible can result in a lower insurance premium. However, it also increases the business’s responsibility for covering the cost of smaller claims themselves.

Businesses need to strike a balance, choosing a deductible amount they can afford while considering the potential premium savings against the risk of having to cover claims out-of-pocket. Similarly, EPLI policy limits typically range from $100,000 to $1,000,000, with higher limits resulting in increased premium costs. The deductible is the amount the insured must pay before the insurance coverage starts, and it includes costs such as attorney fees.

Additional Coverages and Endorsements

Companies may want to consider additional coverages and endorsements to extend their protection. Third-party EPLI insurance is an optional coverage designed to protect businesses from legal claims initiated by non-employees, such as customers, clients, and vendors.

For instance, AIG’s EPLI product provides third-party coverage, covering claims from contractors or vendors alleging discrimination or harassment, and also employment violations over the internet. However, it’s important to note that EPLI policies typically offer limited coverage for wage and hour claims, as well as breach of contract claims. Understanding these limitations is critical to gauge overall protection and potential additional costs.