The Nuts & Bolts of Employer Professional Liability Insurance (EPLI)

The Nuts & Bolts of Employer Professional Liability Insurance (EPLI)

As all veteran business owners know, businesses can be big targets for lawsuits. In some cases, this is because companies can make mistakes in areas such as human resources, wrongful discipline, wrongful termination, and so forth. In other cases, however, businesses can be the target of frivolous lawsuits for no other reason than because they have deep pockets. Regardless of the level of merit of a given lawsuit, the potential for litigation is simply a reality which all business owners need to be aware of. To better protect themselves, business owners should be familiar with employer professional liability insurance (EPLI).

Basics of EPLI

EPLI – also referred to as “employment practices liability insurance” in some cases – is a type of specialize business insurance which covers specific kinds of claims. Every policy is different, but EPLI generally provides coverage for the following claims: hiring discrimination, wrongful termination, sexual harassment, wrongful infliction of emotional distress, negligent evaluation, breach of employment contract, and others. Litigation can be very expensive. When you have EPLI in place, this policy will cover the legal costs associated with defending the lawsuit, as well as any judgments or settlements. Without an EPLI policy, a lawsuit can rapidly deplete even the healthiest reserves. An EPLI can literally preserve your business in some cases.

Costs of EPLI

The question arises: how much does this type of policy cost? There is no way to give an estimate or range because everything depends on a host of variables. The cost of your EPLI will depend on things such as the overall size of your business (in terms of both employees and revenue), the nature of your business, past employment practices, history of litigation, and so forth. As with basically any insurance policy, the greater the risk, the greater the cost. The riskier that your business seems to the insurance company, the higher your rate will be. Hence, if you’d prefer to keep your premiums down as low as possible, your best strategy is to minimize the risks inherent in your organization.

Prevention is the Best Policy

The optimal strategy, of course, is to prevent litigation from happening altogether. This is true even if you have a viable EPLI policy in place. Even if your EPLI covers all the costs associated with litigation in a given situation, this phenomenon could create issues when you attempt to renew your policy at your current rate. How do you prevent litigation? How do you minimize risks within your company? You can do many things in this area. One thing you can do is to create and implement a very fair and balance hiring process to ensure that there is very little possibility of hiring discrimination. You can also be very selecting in your hiring as well in order to potentially avoid internal harassment issues. Be sure to develop a highly effective list of corporate policies which spell out matters regarding career advancement, employee benefits, employment contract issues, and so forth. If you post these policies clearly, you will minimize the probability of litigation.

Be sure to accurately document any incidents which happen in order to ensure that you can adequately prepare for any litigation which does ensue.

Contact the Trembly Law Firm for More Information

Clearly, EPLI can be a very effective means to avert the negative financial consequences of litigation. However, even with an EPLI policy in place, there are also things which business owners should do to optimize their situation and ideally avoid litigation altogether. If you’d like to learn more about this important topic, please contact the Trembly Law Firm today by calling 786-692-8704.

Trembly Law Firm
9700 South Dixie Hwy Penthouse 1100
Miami, Florida 33156
(786) 692-8704

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