Running a business involves many responsibilities, and dealing with workplace issues is one of the most challenging aspects. Employees may sometimes file claims against you or your business for unfair treatment, discrimination or other employment-related concerns. These claims can be costly, time-consuming and even damage your business’s reputation. This is when employment practices liability insurance (EPLI) can help. Read on to learn more about EPLI.
Definition of employment practices liability insurance
EPLI is a type of liability insurance that protects your business if an employee sues you over issues like wrongful termination, harassment or discrimination. It helps cover legal costs and any potential damages, so you do not have to bear the full financial burden if a claim is made against your business. With this insurance, you can rest easy, knowing you are covered if a workplace dispute turns into a legal issue.
How Employment practices liability insurance works?
Here’s how EPLI Insurance works:
- Claim filing: If an employee files a claim for a covered reason, such as wrongful termination, discrimination or harassment, the employer notifies their insurance provider.
- Investigation: The insurance company reviews the claim and determines if it is covered under the policy. They may ask for documents, witness statements or other relevant information.
- Legal representation: If the claim is valid, the insurer will provide legal representation, including appointing lawyers to represent the business. This can include costs associated with defending a claim, such as court costs and attorney fees.
- Settlement: If the case is settled out of court or the business is found liable, the insurance will cover the settlement amount.
- The amount of coverage depends on your policy limit. If the damages exceed the limit of your EPLI, you may have to pay the difference.
Coverage
EPLI provides coverage for the following:
- Employee claims related to unfair firing or wrongful termination.
- Employee claims of unfair treatment based on factors like age, gender, race or disability.
- Claims related to harassment at work, including sexual harassment.
- Protection if an employee claims their contract terms were not followed.
- Coverage for claims related to invasion of privacy, such as unauthorised use of an employee's personal information, surveillance or disclosure of private facts.
- Protection against disputes over employment agreements, like wrongful termination or unfulfilled promotion promises.
Conclusion
Employment practices liability insurance protects your business against a range of uncertainties, such as employee claims and legal disputes. Therefore, investing in it is a smart decision to mitigate financial risks and ensure peace of mind. Without EPLI, your business could face expensive lawsuits that could harm both your finances and your reputation.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It is advised to verify the currency and relevance of the data and information before taking any major steps. Please read the sales brochure / policy wordings carefully for detailed information about on risk factors, terms, conditions and exclusions. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.