I Have General Liability Coverage. Do I Need Employment Practices Liability Coverage as Well?

Summary: General liability coverage is the foundation of a sound business insurance plan. It’s comprehensive coverage that protects against a wide range of risks. EPLI is a very different type of coverage. It’s a more specific kind of insurance with a narrower focus. Do I need both?

General Liability Insurance

General liability coverage is the foundation of a sound business insurance plan. It’s comprehensive coverage that protects against a wide range of risks that include property damage and personal bodily injury claims that can (and, unfortunately, will) arise from normal business operations. It would be irresponsible–and, depending on the type of business and local laws and regulations, possibly illegal–for any business owner to forgo this critical coverage.

General liability, while broad-ranging, is not, however, unlimited in scope. General liability coverage is focused on claims brought by non-employee third parties such as vendors, subcontractors, customers, and even unaffiliated bystanders who just happen to cross paths with your company.

If your company is (justifiably or not) somehow found liable for a covered claim, general liability coverage can help defray the costs of any damage award or settlement, as well as your legal defense in the matter.

Employment Practices Liability Insurance (EPLI)

EPLI is a very different type of coverage. It’s a more specific kind of insurance with a narrower focus.
EPLI is designed to address the special and especially dangerous risks associated with employment practices, procedures, and the workplace environment. In other words, EPLI deals with ‘in-house’ employment issues rather than those regarding ‘outsiders’ or third parties.

EPLI covers claims such as wrongful termination, sexual (and other) harassment, unfair employment practices, wrongful termination, racial (and other) discrimination, poor (dangerous, unfair, or illegal) working conditions, employer abuse, and more.

While it may be true that fewer businesses carry EPLI compared to General Liability, it is decidedly not true to say that EPLI is less important or that employment claims are less damaging to the bottom line and reputation of a company.

Coverage

It’s important to note that coverage details are specific to individual policies and may differ from insurance company to insurance company and from policy to policy. To know what a policy does and does not cover, you must carefully read the policy and the associated contract.
 

What is Covered by General Liability Insurance?

General liability insurance covers incidents that happen on business premises or as a result of normal business operations. The following is a representative list of some–though not all–claims that may be covered by a general liability policy.

• Bodily Injury: Coverage for physical injuries to third parties (customers, vendors, visitors, etc.).
• Personal Injury: Coverage for injuries to third parties that are non-physical in nature (slander, libel, copyright, etc.).
• Property: Coverage for damage to a third party’s property.
• Fire: Coverage for damage to a rented property caused by a fire that your business is responsible for.
• Legal Costs: Coverage of costs associated with defending your business against covered claims.
• Other: A general liability policy may also cover tenant liability, limited employee actions, contractual obligations, medical payments, completed products, and more.

What is Covered by Employment Practices Liability Insurance?

EPLI covers claims that might be made against employers and managers by employees. Below, you will find a list of some claims that typically fall under EPLI.

• Discrimination: Coverage of discrimination claims, including gender, race, age, religion, disability, or other protected characteristics.
• Harassment: Coverage for claims of a hostile work environment, including sexual and other workplace harassment.
• Wrongful Termination: Coverage for claims of unfair or illegal termination of employment.
• Wages: Coverage for claims of failure to properly compensate employees.
• Defamation: Coverage for claims of false statements by employers against employees.
• Other: An employee actions liability policy may also cover claims of invasion of privacy, emotional distress, retaliation, negligence, breach of contract, and more.

Do I Need Both a General Liability policy and an EPLI policy?

Naturally, your specific insurance needs are based on the circumstances of your business. The question of whether you should have both types of coverage will depend on which risks your business faces and which it does not.

We at AmTrust Financial Services consider general liability coverage essential for almost all businesses. The risks involved with going without are simply too great to be ignored or disregarded. The legal costs associated with defending against even a relatively small claim can add up quickly. A damages award or a negotiated settlement can cripple a business. In short, general liability is a must.

The need for EPLI coverage is a function of the number of employees an organization has. Generally, a business that has employees should probably carry EPLI, and the more employees they have, the more coverage they need.

Many small businesses and virtually all large businesses with employees will opt to have both general liability and EPLI.

We believe this makes good economic sense, which is why we often include EPLI–along with General Liability Coverage, Commercial Property Insurance, and Business Interruption Coverage–in the customized Commercial Package Policy Insurance plans we provide to our clients.

We encourage you to contact an AmTrust Financial Services Agent or Partner to learn more.