Many business owners fall into the trap of believing that general liability insurance protects them from all potential lawsuits. This misconception can prove costly when an employee files a discrimination, harassment, or wrongful termination claim. Choosing to rely solely on general liability insurance often leads business owners to regret it when they discover the significant coverage gaps only after facing an employment-related lawsuit. Employment practices liability insurance fills these discrepancies, but the two policies cover very different risks. For a business owner looking for complete insurance services, it is of benefit to know the difference between financial protection and exposure that could leave you devastated.
General Liability Insurance Covers
General liability insurance protects your business from claims involving bodily injury, property damage, and personal injury to third parties. This typically refers to customers, clients, or visitors to your business premises. If a customer slips and is injured, or an employee accidentally damages a client’s property while performing services, general liability is the policy that covers the claim.
In addition, it addresses advertising injury claims, such as libel, slander, and copyright infringement, arising from your marketing materials. This coverage covers the cost of legal defense and settlements or judgments within your policy limits. General liability’s biggest discrepancy is in its failure to cover claims brought by your own employees for employment-related issues.
Employment Practices Coverage Gap
This disparity exposes employers to potential costs of $200,000, with some judgments reaching millions of dollars. Thousands of workplace discrimination charges are filed each year, and these claims fall entirely outside general liability coverage.
Covered Employment Practices
EPLI specifically addresses employment-related claims brought by employees, former employees, and job applicants. Standard EPLI policies typically cover:
- Discrimination claims are based on federal laws protecting protected characteristics, including ethnicity, color, religion, sex, national origin, age, and disability.
- Harassment claims include sexual harassment, hostile work environment, and other forms of workplace harassment that create intimidating or offensive working conditions.
- Wrongful termination is characterized as the illegal termination of an employee for reasons such as retaliation, taking protective leave, reporting safety violations, or reporting a superior for misconduct or failure to perform their duties effectively.
- Retaliation claims allege that an employer knowingly and intentionally punished an employee for engaging in protected activities, such as filing complaints, providing information in investigations, or requesting reasonable accommodations.
- Wage and hour violations may be covered under some policies, though coverage varies by service provider. These claims relate to misclassification, unpaid overtime, or meal and rest break violations.
- Failure to promote or hire claims alleging discriminatory practices in advancement opportunities or hiring decisions.
Detailed Differences
General liability covers claims from third parties, while EPLI handles claims stemming from employees, former employees, and job applicants. This includes discrimination, harassment, and a hostile work environment, wrongful termination, retaliation, failure to hire or promote, breach of employment contract, wage and hour violations, and violations of whistleblower protections. General liability insurance insures against bodily injury to third parties, property damage to third-party property, personal injury, and advertising injury.
Complementary Coverage
General liability insurance and employment practices liability insurance protect businesses from distinct risk categories. General liability protects against third-party businesses and customers who operate independently of the company. Employment practices insurance addresses the exposure employers are at from their own workforce. Neither policy is a duplicate of the other, but they complement one another by filling gaps in coverage. Giving you the most cohesive coverage available.
Call our experienced insurance service today protect your business from employee-related claims.