Insurance for Employee Lawsuits: Don't Forget to Check Coverage
Good article on IowaBiz regarding insurance for employee lawsuits. Most businesses would be smart to explore this type of insurance coverage, especially in today's slumping economy.
I think many small businesses are under the mistaken believe that they are covered for employment lawsuits through their ordinary business liability coverage. This is usually not the case. You will need to purchase a specific policy relating to employer practices in order to be covered. In addition, employer practices liability insurance policies vary greatly so be sure to carefully review the covered items with your insurance agent and lawyer. Find a policy that provides comprehensive coverage.
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Don't forget also to read the exclusions/definitions carefully in the EPLI ("Employment Practices Liability Insurance") policy. The actual employment claims covered by the policy can vary dramatically from company to company. Some policies may not cover punitive damages; others may not cover workplace assault claims (which are often tagged onto sexual harassment claims, for example).