As a business owner, when you think about purchasing insurance you are probably focused on those risks directly related to your work. That would typically include claims involving your services, damage you could cause to customers and third parties, and employee injury and illness while on-the-job. But there is a significant source of potential liabilities you would be overlooking: the inner workings of your company. There is a precarious dynamic between employees and management in every firm, no matter the size. Everyone is on the same team and generally working for the benefit of the company, but there are still expectations and power structures to navigate. Actual or perceived issues among employees can lead to lawsuits that can significantly harm your business. The best way to protect yourself and your company is with comprehensive employment practices liability insurance that covers all your needs.

In this guide, we will provide you with all the information you need about employment practices liability insurance cost so you can make an informed decision about your own policy.

We Cover in This Guide

• How much does employment practices liability insurance cost?

• What is employment practices liability insurance?

• What does employment practices liability insurance cover/not cover?

• Benefits and risks

• Tips for buying

• Types of insurance you may need

• FAQ

• Summary

How Much Does Employment Practices Liability Insurance Cost?

Employment practices liability insurance costs range from $70 to $350 per month depending on your provider, location, limits, coverage, number of employees, industry, employment policies, and claims history. For companies with 5 to 20 employees and $1 million in liability coverage, a policy will typically cost around $125 per month. This coverage can also vary considerably depending on your location. For example, with the rising number of claims coming out of California, the premium rates are climbing. Additionally, larger firms with hundreds or even thousands of employees can expect to pay much more than a small business.

What is Employment Practices Liability Insurance?

There are plenty of reasons why an employee might file a lawsuit against your company. They may feel they have been unfairly passed over for a promotion. Their supervisor or coworkers may harass them directly or create a hostile work environment. If you are sued for any of these situations, or some other covered scenario, that is where employment practices liability insurance comes into play. Dealing with these lawsuits can be especially damaging to a small business just getting on its feet. Employment practices liability insurance is a policy that protects your company against claims filed by employees against the company and the supervisors they employ. It is an essential coverage for every business, small and large, in every industry.

What Does Employment Practices Liability Insurance Cover/Not Cover?

While each employment practices liability insurance policy is a little different, a good insurance package should include coverage for the following claims:

• Descrimination based on a variety of protected categories

• Wrongful termination, punishment, or demotion

• Harassment from supervisors or other employees; sexual or otherwise

• Deprivation of benefits

• Retaliation by managers

• Defamation by superiors or fellow employees

• Various types of negligence, including evaluation, manager supervision, compensation, promotion, and hiring

• Distress; either mental or emotional

• Invasion of privacy

There are certain risks that are not included in typical employment practices liability insurance policies. These potential liabilities are typically covered by other types of insurance. The following are some examples:

• Penalties, civil fines, and unpaid wages

• Bodily injury or illness

• Fraud and other intentional or dishonest wrongdoing

• Property damage

Benefits and Risks

Employment practices liability insurance offers numerous benefits to cover the risks of running your business. The following are some examples:

• Cover legal expenses: The most costly, time-consuming, and potentially damaging situation you may face is a lawsuit. With this insurance, if an employee files a claim, the legal expenses are covered, as are the damages if you lose the case.

• Peace of mind: Knowing that you are covered in case there is a legitimate issue, or if there is simply a disgruntled employee, will allow you and your employees to focus on what you can control.

• Protecting business assets: There are countless potential risks that could destroy your business and wipe out your earnings. Employment practices liability insurance will protect you against these possibilities.

Tips for Buying

Employment practices liability insurance cost is not not the easiest thing to understand. Consider the suggestions below as you begin your search for the right policy.

• Work with an independent agent: An independent insurance agent will help direct you toward insurers with the best rates and the most experience covering your industry.

• Identify your risks: Be sure to thoroughly analyze your business structure, your training, and your personnel, to identify potential risks.

• Compare quotes: Rates tend to vary between insurance providers. Consider at least three quotes to find the best rates and coverage.

Types of Insurance You May Need

• General Liability Insurance: Protects you against third-party claims of property damage, personal injury, bodily injury, and other related scenarios.

• Cyber Liability Insurance: Protects your business from liabilities, damages, and losses related to data breaches and other cyber attacks.

• Inland Marine Insurance: Covers damage to and loss of your assets in a vehicle while being transported between locations.

• Liquor Liability Insurance: A crucial policy for any business that serves alcohol. It protects you against liabilities caused by a patron who gets drunk in your establishment.

• Special Events Insurance: Covers general liabilities that may occur during a special event. Including third-parties and hired contractors.

FAQ

- Does employment practices liability insurance cover employee injury and illness?

No it does not. To protect your business against that risk, you need workers’ compensation insurance. It covers employees who get injured or sick while performing their normal work tasks. Additionally, it provides for medical costs and lost wages.

- How do I protect my company from third-party harassment claims made against my employees?

There is a separate employment practices liability insurance especially designed for such a scenario. It is called a third-party EPLI. It includes all the scenarios mentioned earlier, but expands the coverage beyond employee claims to those of customers and other third parties.

- I am worried about claims of unpaid wages by employees. Is there a way to add this coverage to my employment practices liability insurance?

You should check with your provider. Some allow you to add an endorsement to cover these disputes, but only for the defense costs. You will have to pay for damages out of pocket.

Summary

Employment practices liability insurance is the best way to protect your company from the various potential liabilities involved in any workforce.

After reading this guide and following its suggestions, you should have a greater understanding of employment practices liability insurance costs and feel confident that your policy choice will cover all the risks of your business.