Employee practices liability insurance (also called employer practices liability insurance) is a must-have for all businesses big and small. EPLI protects companies against claims of discrimination, harassment, wrongful termination, emotional distress and many other common employee complaints. Every business with employees is at risk of getting hit with an employee lawsuit no matter how careful they think they are.
The cost of employee practices liability insurance depends on a variety of factors. Underwriters typically take the following into consideration:
- Number of employees (usually # 1 determination of premium)
- Financial worth of the company
- Industry or business (certain industries inherently carry more risk than others)
- Turnover rates
- Hiring/firing procedures
- History of claims
- Written company procedures on employee conduct and training
Another big factor in the cost of EPLI is the amount of coverage the employer is looking for. Most EPLI policy limits range from $100,000 to $1,000,000. It’s also important to note that many EPLI policies include a deductible. The amount of coverage that your business will need has a lot to do with the same risk factors listed above. It’s a good idea to talk to an insurance adviser or broker to determine what coverage limits would be best for your company.
As far as cost goes, most small and medium-sized businesses can expect to pay between $800 – $3,000 (depending upon industry) annually for EPLI coverage. This range will typically cover a business with 5 – 20 employees. For larger companies or those in a high-risk industry or with a history of claims, yearly EPLI premiums could increase substantially.
Paying $4,000 a year for EPLI may seem like a hefty cost to a medium-sized business owner, but it will sure seem worth the price if you ever get hit with an age discrimination, sexual harassment or wrongful termination lawsuit. The truth is, employee practices liability insurance has been falling in price for years as more and more insurance companies offer the policy and seek to stay competitive.
Now is actually a great time to shop around for EPLI policies. There are more options to choose from, and the price is as low as it’s ever been.
Just take care to study each policy carefully or to review it with your insurance broker. There is still not a standard for EPLI, which means that the policies vary greatly in coverage. Some will not cover wrongful termination of an implied contract, wrongful demotion, or failure to grant tenure claims. Others will not cover independent contractors even though they do have the ability to sue your company.
Overall, we at Fusco & Orsini Insurance Services strongly recommend sitting down with an insurance agent to discuss employee practices liability insurance coverage and costs for your business. We would be happy to answer all your questions and recommend the best policies for your budget and situation. Call us at (858) 384-1506 or contact us through our website.