Employment Practices Liability Insurance also known as EPLI, is a claims-made insurance policy which compensates defence cost and settlement expenses incurred by an Employer against fighting employee related court cases. An employee is a crucial part of any organisation and fighting against an employee related court case can result in a financial and reputational loss for an organisation. The Employment Practices Liability Insurance can be purchased by an employer as an addon or extension under directors and officer’s liability insurance policy.
Court cases such as unfair termination, bias, sexual harassment, revenge, workplace mental harassment and violation of employment contract etc can put a great strain on an organization or company. Employee practices liability offers coverage under directors and officers liability policy is a means to survive during such possibilities and mitigate the risk of facing an employee related court case. Hence employee practices liability insurance cover is a component of risk management available in Directors & Officers Liability Insurance Policy.
A working employee may file approach the employment tribunal against unfair termination and violation of an employment contract or a former employee may file a court case against sexual harassment. The probability of such cases is high these days, because of awareness and conscious employees. It is always good to be prepared for incidents and be ready with a protective and reliable plan to deal with such cases. The Employment Practices Liability Insurance coverage assists you to settle such claims and reimburses the defense cost.
In most of the Director's & Officers Liability Insurance policies, EPLI coverage is included by default. Having said that it is necessary to check the policy schedule to ensure the coverage is available in the policy. If your Director's & Officers Liability Insurance Policy is not offering the coverage then the EPLI coverage can be added by paying marginal extra premium. EPLI also comes as a standalone policy, in case the there is a high risk of employee related court cases happening then one can consider to buy it as a standalone policy which may offer more comprehensive coverage. For instance, standalone EPLI policy will offer wider coverage and include a lower level of employees as well but the add-on EPLI cover may only cover top-level management.
ABC Enterprises has purchased the Directors and Officers Liability Policy which had the EPLI coverage as an add-on. An ex-employee has filed a defamation case against the company blaming the Directors of making the wrong statement against him damaging his reputation. Due to the statements made the employee got rejected in the background checks at his new job. The company claimed to have no idea of wrongdoings on their part but the Director had to fight the case to safeguard the goodwill and reputation of the company. The company having the Director's & Officers Liability Insurance Policy will get reimbursement as per the norms for the cost of fighting the case and any settlement paid to the ex-employee.