As a rental business owner, you wouldn’t face the risk of fire, theft, customer injury or other catastrophic event without the proper insurance protection. Did you know it’s more likely your business will be confronted with an employment-related claim than any other type of risk?
While lawsuits related to employment practices are more common than ever, don’t assume you have protection for these losses through your general liability (CGL) or business owner’s policy (BOP). Typically, these policies expressly exclude employment-related claims. That’s where EPLI comes in.
What is EPLI?
Employment Practices Liability Insurance (EPLI) is another important component in building a complete insurance solution to protect your rental business.
An EPLI policy offers insurance protection against claims and lawsuits brought against a business, its officers, managers or employees and can be filed by employees, former employees and even employment candidates. The most frequent claims are employer retaliation, race and sexual discrimination.
EPLI policy coverage includes the payment of defense costs, damages, judgments and settlement amounts within policy limits, regardless of case outcome. Some insurers provide EPLI coverage as an endorsement to the BOP, while others offer it as stand-alone (monoline) coverage.
Why you need EPLI
The number of employment-related claims filed through the U.S. Equal Opportunity Employment Commission (EEOC) continues to trend upward. Persistently high unemployment rates and changing regulatory and enforcement activities are contributing factors.
Adding to the trend is the fact that filing an employment-related charge is simple, and free. A claim can be initiated by phone or mail, or filed in person at an EEOC office.
While filing a complaint is free the costs to defend a claim, even a frivolous one, are definitely not. As the number of employment-related claims has increased, so has the size of awards.
Factors to consider
Discuss EPLI with an insurance provider or broker that really understands your rental operation, one that can help you determine the most appropriate, cost-effective way to address the risks and requirements of your business.
Generally, EPLI coverage can be purchased with limits ranging from $1 to 25 million. Annual premiums are typically in the range of $2,000 to $4,000 for businesses with 5 to 20 employees.
Look for a policy with a reasonable deductible that provides coverage for acts occurring prior to the inception of the policy (“full prior acts”) and third-party claim coverage that protects your business against legal issues that arise between your business and others, such as vendors or customers.
Poor employment practices put your rental operation at risk. A preventive approach goes far in mitigating your exposure. All companies, regardless of size, should look to their personnel policies as the first line of defense against employment-related claims.
The best protection is to have good policies and practices in place and create a positive workplace culture with zero tolerance for discrimination, harassment and other illegal activities.
Last line of defense
Although the first line of defense should always be a sound employment policy, EPLI coverage can reduce operational uncertainties and be an invaluable lifeline for a rental business when faced with an employment-related claim.