Many companies carry various types of liability insurance to protect their business.
A General Liability policy covers basic situations such as property damages, injuries and advertising claims. A Professional Liability policy covers a business against an employee who acts unprofessionally as well as against legal agreements and problems from bad agreements, or those that are negligent. A Product Liability policy covers consumers who might have been injured by a product or service.
More recently, insurance companies have been offering another type of insurance to protect businesses against claims made by employees and former employees. It’s called employment practices liability insurance. It covers employers against various claims of discrimination and such things as charges of wrongful termination and sexual harassment.
Such claims are becoming more common, with more than 24,000 lawsuits filed against employers for discrimination in the late 1990s alone.
The terms of policies will differ depending on the insurance provider, but most employment practices liability coverage obligates the provider to defend its client company whether the deductible for the policy has been reached or not. Policies also may have terms which allow the provider to recommend a settlement and to pay only the recommended amount even if the company does not agree with the provider’s recommendation.
If you get employment practice liability coverage for your business, you want to make sure that it covers against claims by all employees, including part-time workers.
At a minimum, policies should cover civil judicial actions and arbitration. You may want to get a policy that is more expansive. Some also cover issues such as invasion of privacy and causing emotional distress.
Even if you own a small business, you can still get employment practices liability coverage. Such companies as State Farm and INSPRO offer policies for small businesses.
If you have a medium-sized business, you want to get a policy that covers the basic types of discrimination claims. You also may want to think about including coverage for claims that are related to the particular type of business you do.
Zurich offers employment practices liability insurance to companies with fewer than 300 employees. American International Group (AIG) offers comprehensive EPLI for everything from harassment, discrimination, termination, retaliation, wrongful failure to employ and failure to grant tenure.
While large companies have no problem finding employment practices liability insurance, it is important to find a policy that fits your needs the best. It may be necessary to get the advice of a consultant to help determine which type of policy is right for your firm.
For example, it is important to get a policy that allows your company to choose its own attorney in the event a claim is made. Some policies only allow the insurance provider to choose the attorney, and they may not obtain one with the requisite experience in employment law.
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