Employment Practices Liability Insurance

If growth in annual premiums is any indication of employer interest, the Employment Practices Liability Insurance (EPLI) market measured a 50%+ increase in the last decade, totaling $1.85 billion in gross premiums last year.

What is Employment Practices Liability Insurance?

To aid employers in managing the financial risks resulting from discrimination, wrongful discharge, harassment and other workplace claims, insurers have created a product generally known as employment practices liability insurance (EPLI). These insurance polices are issued either as a stand-alone policy or in conjunction with another insurance policy (such as part of a multi-risk insurance program or directors and officers liability insurance). Both stand-alone and multi-risk policies provide insurance coverage for the cost of defending a claim and indemnity for liability. Like other forms of insurance, the limit of coverage and the applicable deductible will depend on many factors which your company should address with its broker.

Does the Company have the right to Select Counsel?

EPLI policies vary with respect to the right of the insured entity to select counsel. If the policy is a “duty to defend” policy, the defense is tendered to the carrier, which may reserve the right to select counsel. Many carriers utilize a defense panel format, i.e., the insured can select defense counsel from a group of law firms approved by the carrier for inclusion on its defense panel. In contrast to a “duty to defend” policy, a “reimbursement” or “indemnity policy” usually leaves selection of counsel to the insured entity. In these instances, there may not be a panel of defense counsel.

What are the Company's Obligations under an Employment Practices Liability Inurance Policy?

The rights and obligations of the insurer and the company generally are set forth in the insurance policy itself. Among the company’s most important obligations is the duty to report claims in a timely manner and to cooperate in the defense of the claim.