Alabama Employment Practices Liability Insurance

Alabama is home to 71,279 small businesses that have employees, and these businesses employ about half of the state’s private workforce.

Any business that hires employees takes on a measure of risk that these workers may one day find a reason to sue them. Whether or not the cases hold merit, costs for legal defense can build up quickly. That is why employment practices liability insurance is so important.

If you are an employer in Alabama, be sure to discuss your coverage options with a local independent insurance agent. These agents can explain what an employment practices liability insurance policy can do for your business and can help you find great coverage at a competitive price. Talk to an insurance agent near you to get started.

What Is Employment Practices Liability Insurance?

Employment practices liability insurance (commonly referred to as “EPLI”) is commercial liability insurance product that is designed to cover employers against accusations of illegal employment practices.

These lawsuits may be filed by current, former, or even potential employees if they believe that their legal rights have been violated.

Who in Alabama Needs Employment Practices Liability Insurance?

Any business that has employees can benefit from the protections offered by an EPLI policy.

The Insurance Information Institute reports that most employment practices suits are filed against large corporations. But no company, regardless of size, is immune to this risk.

According to a study conducted by Hiscox, Alabama ranks 4^th in the nation for EPLI lawsuits. In fact, businesses in Alabama are 41% more likely to be the subject of an employee lawsuit than the national average. This makes purchasing a policy in this state all the more important for employers.

How Much Does Employment Practices Liability Insurance Cost in Alabama?

There are a few factors that can influence how much an EPLI policy will cost for your Alabama business. 

• The number of employees your business has
• Your company’s rate of employee turnover
• Your company’s claims history
• The amount of coverage you are purchasing
• The size of your deductible

On average, small businesses in the US pay about $800 a year for EPLI coverage while mid-sized companies spend about $3,000 a year. Large corporations can spend significantly more. Rates in Alabama may be a bit higher due to the large caseload in this state.

Think that is a lot to pay? Consider this: in 2018, the average cost to settle an EPLI claim out of court was $75,000. Cases that went before a jury resulted in an average claim of $217,000. This is why EPLI coverage can prove invaluable.

Local independent agents can help you comparison shop so you can be certain that the policy you choose offers suitable coverage at a great price.

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Employment Practices Liability Insurance vs. Employment Liability Insurance

It is possible that your business is already covered by employment liability insurance. If so, you may wonder whether it is necessary to also purchase an EPLI policy. The short answer is yes.

Employment liability insurance is different from employment practices liability insurance.

• Employment liability insurance: This is designed to cover employers against financial losses resulting from employee injuries or occupational illnesses that are not covered by workers’ compensation insurance.
• Employment practices liability insurance: This is designed to cover employers against lawsuits resulting from accusations of illegal employment practices.

A local independent agent can explain all of your business insurance policy options and can help you find all the coverage you need at an affordable price.

What Does Employment Practices Liability Insurance Cover?

EPLI can cover court costs, legal defense fees, and damages if your company is accused of illegal employment practices such as the following.

• Harassment
• Retaliation
• Wrongful termination
• Discrimination
• Breach of contract
• Failure to employ or promote
• Wrongful infliction of emotional distress
• Mismanagement of employee benefit plans

Your policy can reimburse your company for costs regardless of whether or not the courts rule in your favor.

Different insurance companies offer different ranges of coverage, so it is a good idea to compare a few different policies and quotes before you decide on which to purchase. A local independent agent can help.

What Does Employment Practices Liability Insurance Not Cover?

There are a few potential employment practice liability exclusions that business owners should be aware of such as the following.

• While your policy will pay costs associated with judgments and settlements, it will most likely not cover punitive damages, criminal fines, or civil fines associated with the lawsuit.
• EPLI will not cover liabilities that are covered by other policies like workers’ compensation insurance.
• Many EPLI policies include exclusions for cases involving violations of the following acts,
  • The National Labor Relations Act
  • The Worker Adjustment and Retraining Notification Act
  • The Occupational Safety and Health Act (OSHA)
  • The Employee Retirement Income Security Act (ERISA)
• Many EPLI policies include exclusions for privacy violations if they are the result of a computer breach.

If you have questions about your EPLI policy’s limitations, you can get information from your local independent insurance agent.

How Can Alabama Business Owners Find the Best EPLI Coverage?

The easiest way to find a comprehensive, yet affordable, EPLI policy is by working with an independent insurance agent. These agents work for you, not for a particular insurance company, so they are free to shop around to find the coverage you need at a competitive rate.

There are more than 330 independent agents in Alabama, so it should be easy to find an insurance agent with an office near you. Set up an obligation-free appointment today to learn more.