Does a Business Owners Policy with Employment Practices Liability Insurance cover me for Retaliation?
Does a Business Owners Policy with EPLI insurance cover me for retaliation?
This answer varies greatly from company to company, but the short answer is usually yes, but with only very minimal coverage. With most business owners policies, the coverage is not nearly enough. Having stand alone employment practices liability insurance (EPLI) is usually the only way to be adequately covered.
You may have a business owners policy that covers liability in the millions. But look closely at the EPLI part of it.... You may be shocked to see that coverage for EPLI related claims are usually capped at very low levels. In fact, some major carriers cap their business owners policies at 10,000-20,000 for EPLI claims. In many of these claims, that's not even enough to cover the legal fees, let alone cover you for a lawsuit!
Why is coverage against Retaliation so important?
Retaliation has recently passed both discrimination and sexual harrassment (which are also both fully covered with a stand alone EPLI policy) as the #1 reason why employees are suing their employers.
Should I replace a business owners policy (BOP) with a stand alone EPLI policy?
ABOSLUTELY NOT! A BOP is your main protection against liability. EPLI is just a small but important part of that. But the problem is that campanies who offer BOP's are continually limiting the coverage towards EPLI related claims to where a business owner really needs both a BOP and a stand alone EPLI policy to be adequately protected. The good news is that a stand-alone EPLI policy only costs a small fraction of what a Business Owners Policy costs.
Does a stand alone EPLI policy cover me for punitive damages if an employee wins a suit against me?
That answer totally depends on what state you're in. I can only answer that for the 6 states that my agency serves:
Ohio - No, state law forbids it.
PA - No, state law forbids it.
West Virginia - Yes, stand alone EPLI can pay against punitive damages claims.
Virginia - Yes, stand alone EPLI can pay against punitive damages claims.
Indiana - Most likely NOT. There's no law that forbids it, but the way the laws are written, it seems to be nearly impossible.
Michigan - Not applicable. Michigan doesn't award punitive damages for these types of lawsuits.
The only way to really tell whether or not your business owners policy is adequate as far as EPLI related claims is to simply take a close look at your policy, or call and ask your agent. There are three major things to look for as far as shortcomings:
What is covered? A good EPLI policy will include all of the following without any exclusions:
If any of these are missing on your business owners policy, you may want to look into stand-alone EPLI coverage.
2. How much is covered?
This is where most business owners policies fall short. A good stand alone EPLI policy will allow you to select coverage ranging from 100K- 2 million dollars. A business owners policy (BOP) usually offers only 10K-20K of EPLI coverage. As I mentioned earlier, that is weak!
3. What additional coverages are offered on a stand alone EPLI policy that a BOP with EPLI doesn't have?
A good stand-alone EPLI policy will offer the following:
Defense outside of limits option. This is where your legal fees do not count against your total liability coverage. With a BOP policy, legal fees alone can exhaust your liability limit!
Third-party coverage (available for most businesses). This covers you if a third party not associated with your business causes you to be sued by an employee as a result of the third party's actions. (Example: you're a store owner, and a customer does something to offend your cashier ..... The cashier later files suit, claiming that you didn't do enough to prevent the situation from happening again.)
Full prior risk coverage. This coverage is for a wrongful incident that took place before the policy was in place, as long as the claim is made during the policy period, and there was no knowledge of the incident prior to taking out the policy.
These are the three things you need to check on when reviewing your business owners policy. If you find that your EPLI coverage is inadequate, feel free to get an online EPLI quote, and I will find you affordable EPLI rates for your business. I can quote any small business, or I can quote larger businesses with up to 250 employees (with part time employees counting as 1/2).
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Dan Lyles is an Independent Insurance Agent serving Ohio, Indiana, Michigan, Pennsylvania, Virginia and West Virginia..