What is EPLI and Why Do You Need It?

Hoffman Hanono
July 4, 2024

Employment-related claims are on the rise, and without sufficient insurance coverage, business owners are risking their business and reputation. This is where employment practices liability insurance (EPLI) comes into play.If you’re new to this insurance and have questions about its scope of protection, here's a closer look at what EPLI covers and why it's essential for businesses today.

EPLI Coverage Explained

Many business owners, particularly those running small to medium-sized businesses, may not be familiar with EPLI or believe that general liability insurance is sufficient protection. Unfortunately, most conventional business insurance policies do not cover claims related to:

  • Discrimination based on age, race, gender, religion, and disability
  • Sexual harassment
  • Retaliation
  • Failure to employ—or even promote!
  • Breach of employment contract
  • Wrongful discipline
  • Mismanagement of employee benefits

EPLI is a unique form of business insurance that covers all these liabilities.

Why Do I Need EPLI Coverage?

Protection Against Financial Loss

Employment-related claims can be costly, often reaching well over six figures. These costs can include:

  • Hiring a lawyer
  • Paying settlements to avoid the uncertainty and expense of a trial
  • Paying damages if that claim does go to trial and the courts rule in the plaintiff’s favor

Broader Coverage

General liability insurance covers third-party claims (those brought by customers and vendors) related to bodily injury and property damage. However, it does not cover claims made by employees or prospective employees.

Unlike general liability insurance, EPLI coverage extends to a variety of claims brought by current, former, and prospective employees.

Greater Protection for At-Risk Industries

Employment-related claims can happen in any industry and to businesses of all sizes. However, some industries could particularly benefit from EPLI insurance coverage.

Manufacturing and construction industries, for example, often experience fluctuations in business demand, which can lead to layoffs and an increased risk of wrongful termination claims. Retail and hospitality, too, have a high turnover rate, which can increase the risk of discrimination or harassment claims.

Preventative Protection

In many cases, employment-related claims are groundless. Unfortunately, innocent business owners must still face legal defense fees and related expenses. EPLI insurance ensures you have the financial resources to defend against these claims, even if they are found without merit.

Peace of Mind

All other benefits aside, EPLI insurance gives business owners peace of mind, knowing they have a safety net in case of an employment-related claim. That peace of mind is truly priceless.

Hoffman Hanono: Protecting Business Owners Since 1959

At Hoffman Hanono, we’ve been helping business owners like you find financial security and peace of mind for over 60 years. If you need employment practices liability insurance in California, our agents can help. Contact us now!