Do you have the right insurance for your business?
Most people can’t tell their employer’s liability insurance from their employment practices liability insurance. And we don’t blame them! But as one rejected claim could send your company finances down the drain, it’s important that you have the right cover.
That’s where we can help! Keep reading for our guide on Employer’s Liability vs. Employment Practice Liability Insurance so you can tell the difference.
What is Employers Liability Insurance?
Employers liability insurance protects your business from the cost of employment injury lawsuits. Usually, general liability and workers comp go hand in hand, with employers liability as a top-up. Employers general liability insurance on top of worker’s compensation usually covers:
- Legal Fees: You will have legal fees and court costs in an employee injury lawsuit. When it comes to employers liability vs workers comp, workers comp alone won’t cover the fees. Employer’s liability insurance will though.
- Damages: Negligence, pain and suffering, and similar claims workers’ comp won’t cover. But they can be costly if a court rules in favor of the employee. The right employers liability insurance can save your company from financial ruin.
- Settlements: In some cases, both legal teams will recommend a settlement. This means as the employer, you will settle with the employee before it gets to court. Your employers liability provider will work with the legal team for the employee. They will reach a settlement, and handle making the payments.
- Indirect Liabilities: Illnesses and injuries in the workplace can affect other people too. Spouses, caretakers, and third parties can also sue your business in regards to the impact it has on them. Employers liability insurance will offer protection for these instances too.
As you can see, this type of insurance for business is there to cover the areas that workers comp misses. To protect your business against all areas of an injury/illness lawsuit, you’ll need both in place.
What is Employment Practices Liability Insurance?
Employment practices liability insurance is there to protect against wrongful employment practice claims. It’s usually a type of gap insurance for lawsuits that fall outside of business liability. This includes:
- Wrongful termination
- Discrimination (race, age, gender, disability, etc.)
- Other issues like failure to promote
Directors’ and officers’ liability insurance will only protect the person, not the business. That’s where EPLI comes in, to fill that gap in protection for the company.
Usually, it’ll reimburse any costs for defending the company in a lawsuit. It won’t cover any penalties though. If you think this couldn’t happen to your organization, don’t get too cocky. These types of claims affect businesses of every size in all industries. It can disrupt the flow of business, hurt staff morale, and damage reputations.
And worst of all, all this can happen before you even reach the courtroom! There only has to be the suggestion of misconduct for the ripple effect to start. A lawsuit of this nature could end up costing you clients, so it’s not worth the risk.
Employer’s Liability vs. Employment Practices Liability Insurance: Why You Need Both
When it comes to insurance, the most important thing is knowing what you need and what’s covered. You don’t want to get caught out when you try to make a claim.
Employers liability and employment practices liability insurance cover similar, but distinct areas. Even if you don’t think you’ll ever need to make a claim, they both cover an important gap in traditional business insurance. In these instances, it’s better to be safe than sorry.
If you found this article useful, check out our other blog posts for more tips and tricks to keep your business running smoothly.