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What You Need to Know About EPLI

BY Steven T. Catlett
October 02, 2003

Even one relatively simple single-plaintiff employment discrimination lawsuit may result in substantial losses, which can be devastating for small- to mid-sized employers, particularly if punitive damages are awarded. And the legal expenses of defending such a lawsuit, even if successful, may be just as costly as losing the court battle. Moreover, the number of discrimination cases remains on the rise ' sexual harassment charges alone jumped nearly 50% from 1992 to 2001.

In response, the insurance industry has developed a specific product, Employment Practices Liability Insurance (EPLI), designed to cover costs and liabilities arising out of claims for wrongful employment practices. EPLI policies, however, may not be the entire answer.

Many employers recognize the frequent and often unavoidable nature of employment claims, and treat this exposure as another cost of doing business, despite what they may view as the outrageousness of the suits themselves. Employers seeking greater protection for employment-related claims with less risk of a coverage dispute now turn to EPLI, making it a hot new product. Though only 10% of employers carried EPLI coverage in 1999, it is estimated that within a few years, up to 70% of employers will purchase some form of EPLI. The coverage is particularly popular with larger employers.

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