What is Employment Practices Liability Insurance?
Employee Practices Liability Insurance is a fairly new form of liability insurance. It provides protection for an employer against claims that are made by employees, former employees, or potential employees. It covers sexual harassment, wrongful termination of employment, discrimination (age, sex, race, disability, etc.), and other employment-related allegations. It covers your firm including the Directors and Officers.
When is Employment Practices Liability Insurance needed?
Insurance is needed as soon as you start to hire employees. Directors and Investors often require that you have this coverage as a part of your Directors and Officers Liability Insurance since they too can be held liable in suits regarding to employee practices.
Why is Employment Practices Liability Insurance needed?
Cases against employers are on the rise so it is important to protect yourself in the event of a suit. It is estimated that 3 out of 5 firms will be sued by an employee. Companies are vulnerable from the pre hiring process through the exit interview, even if that employee was never hired, or only with the company for a short period of time. This can happen to any firm, everyone has heard about such situations. Every employer can be the target of legal action from the past, present, and prospective employees. Even if the claim is minor or fraudulent the defense of a suit can be costly over time, financially and in resources. The most vulnerable to these types of claims are new technology firms along with fast growing companies due to their management teams not having yet designed or implemented proper procedures for hiring, firing, and disciplining employees.
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By: Niklas Almström
A typical homeowners policy only provides $2,500 of coverage for business equipment, which is most cases is not enough to cover all of your business property. You may also need coverage for liability and lost income. There are three basic choices to insure your home-based business depending on the insurance company and the type of business you have.
- Homeowners Policy Endorsement
You may be able to double your standard coverage for your business equipment such as computers by adding a simple endorsement to your preexisting homeowners policy, you can raise the policy limits from $2,500 to $5,000 for as little as $25. Some insurance companies allow you to increase your coverage up to $10,000 in increments of $2,500. There is also the option to buy a homeowners liability endorsement to cover in the event a client or delivery personnel gets injured on your premises. These policies are usually only available to businesses that have few business related visitors.
- In-Home Business Policy/Program
This provides more comprehensive coverage for liability and business equipment compared to a homeowners policy endorsement. These policies vary significantly depending on the insurer. These policies most often reimburse you for the loss of important papers and records, accounts receivable and off-site business property in addition to the protection for your business property. Some will pay for the loss of income in the event of a fire or other disaster where your home can’t be used for a period of time. Some in-home policies allow up to three full-time employees as well.
- Business Owners Policy (BOP)
These have been created specifically for small to medium sized companies and could be the perfect solution for you if your home-based business operates in more than one location. A business owners policy like the in-home business policy covers business equipment and property, extra expense and liability, and loss of income, but on a much broader scale than the in-home business policy. If you do have employees it does not include workers compensation, health or disability insurance so you would need separate policies to cover those aspects if necessary.