Employment Practices Liability Insurance Pros and Cons


Have you thought of the possibility of getting a Lawsuit from your employees?

As a business owner, you do whatever is possible to create the best working environment for your team members, so the thought of them suing you is inconceivable. Right?

As a business owner, you would like to believe that the people you hire are like your family. You do what you can to take care of them, and in return, they work hard to help your business become a success.

According to The Hartford, a major business insurance provider, lawsuits against employers have increased over 30% since 2006. With this trend in mind, it’s not impossible to think that your business could be sued within the next couple of years.

Whether you win or lose a lawsuit against your business, it can be costly, with lawyers’ fees, court costs, and other expenses. (Not to mention the potential loss of business while you take care of legal matters.)

You have the option, however, of protecting yourself through insurance, specifically, Employment Practices Liability Insurance, or EPLI. While this type of insurance isn’t for everyone, you should understand the pros and cons of these policies.

Pros of Employment Practices Liability Insurance

1. While every policy is different, a general EPLI policy will protect your business from a wide range of lawsuits, including discrimination, sexual harassment, defamation, wrongful termination, and more. These lawsuits can result in major financial loss, so having a policy, at the very least, gives you peace-of-mind knowing that you’re protected.

2. Usually, EPLI will cover attorneys’ fees and other defense costs which can easily grow into six digits. Depending on the business and the specific situation, defending yourself against a wrongful lawsuit could cost millions.

3. It can be very beneficial to have this insurance, especially as your business grows and hires more employees. After all, the more people you hire, the greater your chance of being sued.

Cons of Employment Practices Liability Insurance

1. The payments. There are many affordable options, and the total cost of this insurance will vary depending on your business and risk level, but if you are still building to generate profits, EPLI insurance may difficult to fund. As the very least, speak with a qualified professional who can show you the available prices of EPLI.
2. EPLI may not cover claims by employees seeking compensation under certain laws such as the Fair Labor Standards Act, the Americans with Disabilities Act, or the Occupational Health and Safety Act. You will want to look at your potential risks and compare these to available policies before signing up.
3. Lastly, some policies may require that you use a certain attorney that the insurance company has chosen. If this is the case, you will have to talk with your insurance company if you want to use your own lawyer. Otherwise, the insurance may not kick in.

No matter what industry you work in, no matter what the size of your business, you owe it to yourself to be completely informed on the pros and cons of Employment Practices Liability Insurance. Don’t leave your business at risk, talk to Avante Insurance today to find out if EPLI is right for you.