Employment Practices Liability Insurance (EPLI) covers policyholders for a broad range of employment-related claims, such as wrongful disciplinary actions, wrongful termination, harassment, and retaliation. With employers responding to economic fluctuations by cutting back or increasing their labor force and the ever-changing landscape of employment discrimination law, EPLI can be a valuable risk transfer solution for employers. Since EPLI can differ significantly from the better known (and more often carried) commercial general liability insurance, a policyholder-employer may be unaware of the coverage solutions available under EPLI.
SDV assists clients in identifying and securing the coverage that is owed to them. We also collaborate with our clients to identify any coverage gaps and to formulate solutions that meet their needs.
EPLI is often written on a claims-made basis, which provides coverage only if a “claim” is made and reported during a policy period. Thus, definition and interpretation of a “claim” under the policy is important. The definition and interpretation of a “wrongful act” or “wrongful employment/practice” can also be an area where an insurer will seek to deny coverage.
When a “claim” is made is also important for determining coverage, especially because most EPLI policies have an extended reporting period and/or a retroactive date provision. An extended reporting period provision extends coverage for claims made and reported during the extended period, so long as the claim is related to a wrongful act that occurred during the policy period. On the other hand, a retroactive date provision eliminates coverage for wrongful acts that occurred before the retroactive date, even if the related claim is not made until after policy period inception.
Legal fees are typically included within and thus reduce EPLI policy limits. Many EPLI policies also provide that there is no duty to defend unless and until the deductible or retention is exhausted.