The Affordable Care Act
ThePatient Protection and Affordable Care Act(PPACA), commonly called theAffordable Care Act(ACA
2 mins
No matter how positive the work environment and how equitable the regulations are, there is no assurance that a worker will not take legal action against the employer. Therefore, it's vital to have adequate insurance coverage to protect your business from financial losses arising from employee lawsuits. This is where Employment Practices Liability Insurance (EPLI) comes in.
Employment Practices Liability Insurance (EPLI) is a type of insurance that protects businesses from financial losses resulting from lawsuits filed by employees. These lawsuits can be based on a wide range of claims, including breach of contract, discrimination, emotional distress, negligent handling of employee benefit plans, inadequate career opportunities, and more.
EPLI can be obtained as a standalone policy or as an amendment to an existing business owner's policy (BOP). Depending on the cost of your EPLI coverage and the limitations of the policy, you could receive partial to full reimbursement for defending your company in a lawsuit and/or paying claims.
It's essential to understand that relying solely on BOP insurance may not be sufficient to meet your needs. This is because most insurers limit payouts to $5,000. Depending on the severity of the employee's claim, this amount may not be enough to cover the legal costs and claim payments, leaving you with a significant financial burden.
Moreover, even if you have a BOP policy, it does not automatically cover you for employment practices liability. You will need to add an endorsement to your policy to have such coverage.
Many business owners assume that they do not need EPLI coverage because they’ve never had an employee file a lawsuit against them. However, the reality is that employee lawsuits are on the rise, and the cost of defending your business against such lawsuits can be astronomical. Even the most trustworthy employees can make workplace claims, so it's essential to be prepared for such scenarios.
Furthermore, some employees may start with "small claims" that businesses may settle to avoid litigation. Multiple small claims can add up quickly, making it vital to have proper insurance coverage instead of delaying obtaining EPLI or a BOP coverage.
Even though gauging your company’s level of risk may be challenging, you should have a good idea of how likely you are to face an employee lawsuit before selecting an insurance provider. Some other steps to consider include:
Given the increasing frequency of lawsuits, having EPLI coverage has become a necessity for every business. Don't leave your business assets at risk; speak with an agent or broker today about obtaining the right insurance coverage.
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3993 Huntingdon Pike Suite 110
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