Is Employment Practices Liability the same as Employers Benefits Liability? What about Employers Liability? EPL, EBL, EL, what is with all these Employee Liability coverages?

EPL, EBL, and EL are three separate coverages, found on separate policies. While the names are descriptive, it’s too bad the coverages don’t have names that are more distinctive to help insureds understand – not to mention less experienced agents.

In the last of a series on confusing coverage names, Employment Practices Liability is the topic this week. The last two posts discussed Employers Liability and Employee Benefits Liability.

EPL provides coverage for defense, compensatory damages, and sometimes punitive damages, for claims of wrongful employment practices acts. Policies contain a long list of covered wrongful acts, but the most common claims result from wrongful termination, discrimination, sexual harassment, and retaliation.

There are two types of EPL coverage, First Party and Third Party. First Party responds to claims of the insured’s employees. Think of management firing an employee due to pregnancy, or one employee discriminating against another. An employee is damaged and brings a claim.

Third Party responds to claims of third parties, nonemployees who experience wrongful acts from the insured’s employees. Think of department store employee discriminating against or harassing customers, or vendors. The customer or vendor is the third party who is damaged and brings a claim.

EPL can be a part of a Management Liability package. Like other Professional Lines policies, EPL:

• Uses Claims Made form.
• Uses Defense Inside or Defense Outside (except in Nevada, where Defense Outside is required, see this post).
• Can cover Wage and Hour claims (see this post).

Any business with employees has an EPL exposure. The greater the number of employees, and the more interaction with nonemployees, the greater the exposure. The average cost of defense, just to get a claim dismissed, is more than $100,000. For many businesses, the investment in insurance makes sense.