Cost vs. Risk – Pricing for EPLI policies can vary widely, but is generally based on the number of employees. Because the premiums are relatively inexpensive, however, the benefits of purchasing an EPLI policy typically far outweigh the cost. Small businesses may be especially vulnerable to employment related claims as they often lack formal procedures for hiring, managing and terminating employees, or fail to implement such procedures.
In addition to the insurance protection, many policies also offer valuable loss prevention services such as online resources, access to HR consulting firms, law firms, toll-free hotlines and other specialized services, all of which can help avoid EPL lawsuits.
Understand the Policy – As with all types of insurance, it is important to understand a policy’s key terms and provisions. Some of the more important issues for EPLI policies include:
Exclusions: Common exclusions include intentional violations, strikes, lookouts, invasion of privacy, network security and claims made after a business files or is placed in backrupcy receivership, liquidation or conservation.
Who picks the attorney: If a lawsuit is filed against the insured, who chooses the attorney to defend the lawsuit? Some insurance companies permit the insured to choose the attorney, while others reserve the right to select the attorney.
Third party coverage: An additional consideration is whether or not coverage is needed for vendors, independent contractors, customers, clients and other third parties. Third party liability coverage is usually available for a relatively small additional cost, but you must be sure to ask for it.
Seek Professional Guidance – Insurance agents and brokers, insurance counselors and other trained financial consultants can help provide answers to detailed questions about a particular policy. These professionals are also helpful in selecting the right policy and the appropriate amount of coverage.
Julie Ngo is a State Farm Insurance Agent located at 28410 Old Town Front Street in Temecula. She can be reached at (951) 695-2625.