Employment-related risks are generally not covered through a Business Owners Policy. You need to obtain this coverage through a separate policy.

The cost of EPLI coverage depends on your type of business, the number of employees you have and various risk factors such as whether your company has been sued over employment practices in the past. The policies will reimburse your company against the costs of defending a lawsuit in court and for judgments and settlements.

The policy covers legal costs, whether your company wins or loses the suit. Policies also typically do not pay for punitive damages or civil or criminal fines. Liabilities covered by other insurance policies such as workers compensation are excluded from EPLI policies.

If you're uncertain, take time right now to learn how you can protect your firm against employment practice liability.

1. Do your homework. Learn how to prevent exposure to employment-related risks; implement policies and procedures that help protect your practice.
2. Don't rely on your Business Owners Policy (BOP) for employment practices liability coverage. Most of the time, your BOP does not cover these kinds of risks; instead, you need to obtain specific coverage under a separate policy.
3. Inventory your firms' risks. EPLI policies are customized to your firms' specific risks. Understanding what your needs are will help ensure you get the protection you really need. After your policy is drawn up, go back through it to make sure all of your risks have been addressed. And, always - ask your broker if you have any questions or concerns.
4. Make sure your level of coverage matches your level of business risk. Paying a modest premium each year can help you avoid financial catastrophes if/when you face business liability claims.
5. Ask about EPLI policy timeframes. Determine when your coverage begins and ends to avoid headaches that may occur years after your firm closes.

To prevent employee lawsuits, educate your managers and employees so that you minimize scenarios that would lead to an employment-related lawsuit.  Examples of best practices include:

 

• Create effective hiring and screening programs to avoid discrimination in hiring.
• Post corporate policies throughout the workplace and place them in employee handbooks so policies are clear to everyone.
• Show employees what steps to take if they are the object of sexual harassment or discrimination by a supervisor. Make sure supervisors know where the company stands and what behaviors are not permissible.
• Document everything that occurs and the steps your company is taking to prevent and solve employee disputes.