Uncovering Business Exposures: Employment Practices Liability Insurance

Posted by Joseph Belt on June 29, 2017

If you speak with a small business owner regarding the greatest threats their business faces, they may list competition, a changing marketplace, or inherent risks that insurance protects against (like fire, theft, or vandalism). There is an ever-growing reality, however, that every business owner faces and many fail to insure against: Employment Practices Claims. Most administrators are aware of the physical liabilities present, like property damage, bodily injury, and personal injury. These categories do not account for the emotional liability that is inherent in any kind of business. In the daily interactions of employees and customers, liability is always present within the interpersonal relationships of your office and interactions with customers.

Claims of this kind are excluded from the standard business insurance policy and can create a dangerous liability.

No matter how large or small a company is, this exposure exists. What many do not realize is that even an alleged incident can create thousands of dollars of losses, due to attorneys’ fees, and can damage your reputation.


Either real or alleged incidents can include:

  • Discrimination
  • Harassment
  • Disciplinary Actions
  • Wrongful Termination
  • Failure to Promote


An employee can allege any of the above-bulleted points and create liability for a business owner. If an actual incident of negligence were to occur, the claims can leave companies on the hook for attorneys’ fees, damages to the employee, and back wages.

The article Top Trends in Employment Practices Liability Claims states, “Unpaid internships, illegal background checks, pregnancy and health-related employment discrimination continue to be the top trending employment practices litigation cases.…Claims costs are rising, in part due to the length of time it takes to resolve an EPL claim….defense costs can top out at $300,000 and the timeline for resolution can be anywhere from 18 to 24 months.”

As a small business owner, can your business afford to fight alleged claims in court for up to two years? If defense costs hit $50,000 or up to $300,000, could you handle the loss? These are real scenarios that can affect any business owner, large or small. Give us a call today to review your current insurance program to see if you are currently covered in the event of an Employment Practices claim. We can help!

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