In 2018, 65% of all businesses are now buyers of this essential business coverage. It is no longer that is just an employer/employee workplace risk- the risk also extends to third parties that are exposed to your employees and workplace. This includes customers, vendors, delivery persons, visitors, and any others you or your employee comes into contact with in a corporate capacity.
In addition to this, claims covered under the EPLI policy represent a majority of the total reasons for claims under a combined management liability policy. These include claims relating to harassment, bullying, retaliation, and discrimination.
1. Prior claim experience is not an indicator of future claim risk. In addition, it is more difficult to get the coverage after a claim, and more expensive, than it would be had coverage already been in place at the time of a claim.
2. EPLI claims are unique to the EPLI policy. All other policies contain an exclusion relating to any “employment-related matters”. Since EPLI is not usually required to be purchased by law or contract, businesses should not use that as a marker for buying coverage.
3. Being either privately held or family owned has no bearing on the exposure to EPLI claims. Businesses should not confuse the risk to be limited to employee vs. employer claims. Third party claims account for many of the actions brought against businesses, therefore, the risk is an external as it is internal.
4. Having good policies and procedures in place is what makes you an excellent insured, but it doesn’t make you self-insurable. EPLI claims are costly, and they can occur against businesses with good policies and procedures in place just as they can against those who do not. It only takes a single incident to result in a loss, and those costs continue to rise.
5. EPLI is very competitive an affordable in 2018, and average claims are now over $100,000, which is multiples of the cost of a policy. All agents should make every commercial insured aware of this coverage, and for the reasons above, the need to buy this coverage. Pay special attention and concern to the risk of third party claims, and why employers just do not know of their exposure to this risk.
Today’s commercial insured will look at their insurance portfolio as a means of disaster planning. D&O, EPLI, and Cyber Liability insurance coverages are essential to every commercial entity. Rather than being offered or asking if they want a quote, they should be presented with options that make financial sense while being properly educated on their exposures to risk they just may not have seen.
Finally, offering the right protection to your customers will at the same time offer protection for you. A big reason today’s E&O carriers are paying claims is due to the un-insurance or underinsurance of these coverages for their customers. Diligence in understanding these policies and the risk they present to your customer is your best offense and defense simultaneously.
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