Understanding the distinction between Employer's Liability and Employment Practices Liability insurance is crucial for businesses to ensure comprehensive protection against employee-related claims that could result in significant financial exposure.

Coverage and common claims

Employer's Liability Insurance covers legal defense costs and settlements when employees sue for negligence related to workplace injuries or illnesses, such as claims alleging unsafe working conditions that led to injury. Employment Practices Liability Insurance protects against workplace misconduct allegations including discrimination, harassment, wrongful termination, and retaliation claims.

When you need each

Employer's Liability is essential when you have employees who could be injured on the job and might sue beyond Workers' Compensation coverage, particularly in high-risk industries like construction or manufacturing. Employment Practices Liability is necessary for any business with employees, as workplace misconduct claims can arise in any industry and the average defense and settlement cost is $160,000.

Typical limits

Employer's Liability Insurance is typically included as Part B of a Workers' Compensation policy and covers the gaps left by standard Workers' Compensation benefits. Employment Practices Liability Insurance is purchased as a separate policy with limits that vary based on company size and risk exposure.

Understanding Employer's Liability coverage

Employer's Liability Insurance specifically addresses situations where employees allege that employer negligence contributed to their workplace injury or illness. This coverage extends beyond basic Workers' Compensation to include third-party over claims, loss of consortium claims from family members, and dual capacity claims where the employer might be sued in multiple roles. The insurance handles complex scenarios like consequential bodily injury claims, where family members suffer stress-related illnesses due to an employee's workplace injury.

Employment Practices Liability scope

Employment Practices Liability Insurance covers a broad range of workplace misconduct allegations that can arise from day-to-day employment relationships. This includes discrimination based on protected characteristics, improper hiring practices, failure to promote for non-performance reasons, and third-party liability involving non-employees. The coverage is particularly important for startups and growing companies that may lack robust HR departments to prevent such claims.

Risk prevention strategies

Both types of insurance benefit from proactive risk management approaches, though they focus on different areas. Employer's Liability claims can be reduced through comprehensive safety programs, regular workplace inspections, and detailed incident documentation. Employment Practices Liability risks are mitigated through robust HR policies, regular employee training on workplace behavior, and maintaining compliance with evolving employment laws.

The scenarios described are offered only as examples. Coverage depends on the actual facts of each case and the terms, conditions and exclusions of each individual policy. Anyone interested in the above product(s) should request a copy of the standard form of policy for a description of the scope and limitations of coverage.

What is the difference between Employer's Liability insurance and Employment Practices Liability insurance?

Employer's Liability insurance covers legal defense costs and settlements when employees sue for negligence related to workplace injuries or illnesses, such as claims alleging unsafe working conditions that led to injury. It addresses situations where employees believe employer negligence contributed to their workplace injury or illness, extending beyond basic Workers' Compensation coverage.

Employment Practices Liability (EPLI) insurance protects businesses against workplace misconduct allegations including discrimination, harassment, wrongful termination, retaliation claims, improper hiring practices, and failure to promote. It covers a broad range of employment-related lawsuits that can arise from day-to-day employment relationships.

What are the typical limits for Employer's Liability insurance?

Employer's Liability insurance is typically included as Part B of a Workers' Compensation policy. Standard limits are commonly set at $100,000 per accident, $500,000 for disease policy limit, and $100,000 per employee for disease. However, businesses in high-risk industries or those with significant exposure may choose higher limits, which can range up to $1 million or more per occurrence.

How much does Employer's Liability insurance cost?

Since Employer's Liability insurance is typically included as part of a Workers' Compensation policy, it doesn't have a separate premium. The cost is built into the overall Workers' Compensation premium, which is calculated based on factors such as payroll, industry classification codes, claims history, and the company's experience modification rate.