What does EPLI cover?

EPLI generally covers the following claims: 

  • Sexual harassment: Claims related to unwanted advances, inappropriate comments or other forms of harassment in the workplace.
  • Discrimination: Allegations of discrimination based on race, gender, age, disability or other protected characteristics. 
  • Wrongful termination: Claims that an employee was unfairly fired or let go in violation of employment laws. 
  • Retaliation: Allegations that an employer retaliated against an employee for filing a complaint or participating in an investigation. 
  • Failure to promote or hire: Claims that an employer unfairly overlooked or refused to hire or promote an individual based on protected characteristics. 

What doesn’t EPLI cover? 

While EPLI covers many allegations, it generally does not cover: 

  • Workers’ compensation claims: Employee’s medical bills if they get injured or sick at work, and can’t perform their job duties, are typically covered under separate workers’ compensation insurance policies. 
  • Uninsured claims: Violations of wage and hour laws (like overtime disputes) are often excluded from EPLI, unless specifically added.             
  • Intentional acts: Fraud or intentional harm caused by the business or its leadership is typically excluded from EPLI coverage.     
  • Contractual claims: Breaches of employment contract, unless they’re related to discrimination or harassment. 

Some small businesses may be surprised to learn that wage and hour disputes, which are a frequent source of employee complaints, are generally not covered by EPLI unless a policy rider is added. 

EPLI is not the same as professional liability insurance. EPLI covers employment-related claims such as harassment and discrimination, while professional liability insurance protects businesses against claims of errors or omissions in their professional services. 

How does EPLI work? 

If a small business has an EPLI policy and an employee files a claim, the company can notify its insurer and file a claim under its EPLI policy.  

The insurer will then assign a defense attorney to the case, cover investigation expenses and pay for settlements or judgments up to the policy limits. Many policies require that businesses notify the insurer as soon as they learn of any potential claim. 

Who needs EPLI? 

EPLI is not required by law in most states. However, some government contracts or partnerships might require businesses to carry it.  

While optional, EPLI is highly recommended for small businesses due to the high costs of defending employment-related claims. Defending an employment claim can range between $75,000 and $125,000, but some claims, especially if they go to trial, can easily exceed $250,000, even for small businesses.

EPLI is essential for any small business with employees, as it covers claims that could otherwise severely impact operations.  

Businesses with higher risks, like restaurants, retail stores, and hospitality companies—where there’s frequent public interaction and high staff turnover—particularly benefit from EPLI. 

What are the benefits of EPLI? 

EPLI provides peace of mind and financial security, helping businesses afford the costs of legal defense and settlement. For small businesses, EPLI can prevent significant financial strain and even bankruptcy in the face of a costly employee lawsuit. 

How much does EPLI cost? 

The cost of EPLI for small businesses depends on factors like the business’s size, location, and industry risk. On average, small business EPLI policies cost $800 to $2,000 annually, depending on coverage limits and the business’s claims history. 

How to save on EPLI 

As with the purchase of other insurance policies, there are ways small businesses can save on EPLI. 

They can reduce EPLI premiums by implementing proactive HR policies, conducting anti-harassment training and keeping documentation on employee relations.  

In addition, some insurers offer discounts for businesses that adopt these risk-reduction strategies. 

Which insurers sell EPLI? 

Many insurers that serve small businesses offer EPLI coverage, including: 

  • Allstate 
  • Chubb 
  • The Hartford 
  • Liberty Mutual 
  • Nationwide  
  • Next 
  • Progressive  
  • Travelers 
  • State Farm 

How to buy EPLI? 

Small businesses can purchase EPLI through a broker specializing in small business liability insurance. Brokers help navigate policy options, coverage limits, and costs, ensuring that businesses obtain adequate protection. 

A small business insurance broker, like Insureon, can help compare options from various providers to find the right fit for each business’s needs. 

Can EPLI be a rider or part of other policies? 

EPLI can often be added as a rider to a business owner’s policy (BOP) or general liability policy.  

Adding EPLI as a rider can be more affordable and convenient for small businesses looking to consolidate their coverage. 

Bottom line: What are the benefits of EPLI? 

EPLI provides peace of mind and financial security, helping businesses afford the costs of legal defense and settlement. For small businesses, EPLI can prevent significant financial strain and even bankruptcy in the face of a costly employee lawsuit.

Charles Cartwright , an attorney with more than 25 years of experience, is co-managing partner at  Gonzalez & Cartwright, a South Florida personal injury law firm.