Recent changes in federal law, like the Civil Rights Act of 1991 and the Americans with Disabilities Act, make discrimination claims easier to prove and more costly. As a result, more claims are expected. Because this is a fairly new type of policy, the scope of coverage varies widely among the policies offered. Employment practices liability is generally defined as the results of actual or alleged wrongful termination, sexual harassment or discrimination against an employee or applicant. Policy wording will determine the extent of coverage offered by the carrier.
Exclusions can eliminate some very important coverages.
Organizations interested in purchasing coverage should carefully review the terms and conditions, pricing and underwriting requirements offered by the insurance carriers. The policy will pay for defense costs, judgments, costs to investigate, and administrative proceedings. The policy may cover back pay, loss of benefits, appeals, and bonds, either as standard coverage or through endorsement. Exclusions on an insurance policy are used to clarify what the carrier intends to cover or not to cover. Employment related coverages that are usually purchased through other types of insurance policies are common exclusions on all EPLI policies.