Directors and officers insurance (D&O insurance) is geared to protect your key employees in case of a claim concerning their activities under your employment. These policies often include an additional coverage, Employment Practices Liability (EPLI), which helps fills in the gaps left by a normal D&O policy.
Where a D&O insurance policy covers third party claims, EPLI helps cover claims directly from employees, including prospective and previous employees.
What Does Employment Practices Liability Cover?
EPLI helps cover claims against your key employees regarding:
- Discrimination due to race, gender, sexual orientation, religion, etc.
- Sexual harassment
- Wrongful termination
- Failure to promote
For example, say you have an employee who believes they are being discriminated against by their manager. The employee decides to sue. In this case, EPLI (under D&O) can help cover the related legal expenses.
This insurance also covers claims from previous employees who believe they have been wrongfully fired or prospective employees who believe they were not hired for discriminatory reasons.
Sexual harassment claims are unfortunately common in many workplaces. If an employee files a lawsuit against one of your other employees for harassment, EPLI can help cover the legal expenses and other costs while the employee is facing the lawsuit.
There are some employees who become disgruntled after being let go and believe they have been unfairly fired. If they believe that their termination was due to reasons aside from those which are acceptable, they may file a suit against the manager who fired them.
Failure to Promote
Failure to promote refers to a manager’s refusal or failure to provide an employee with what the employee views as their rightful compensation for their work. For example, say you have an employee who has been working at your agency for almost ten years. They want a promotion, but instead, their manager promotes someone who has been working there less than a year.
Does EPLI Always Come with D&O Insurance?
All Directors and Officers insurance policies are not the same and some do not automatically come with Employment Practices Liability. If you desire additional EPLI insurance, be sure to speak with your insurance agent.
Both of these policies are crucial for protecting key employees within your insurance agency. If a lawsuit occurs, D&O insurance can help pay for the expenses instead of your agency or the employee paying for legal fees out of pocket such as defense costs and settlement expenses.
Also Read: Agency Principals: Protect Yourself With D&O Insurance