Which “Wrongful Acts” Are Covered By EPL Insurance?
Employers and their attorneys usually find?Employment Practice Liability (EPL) insurance ?policies baffling at first, because they cover multiple particular employment claims. It's usually obvious when a negligence claim triggers coverage under a commercial general liability or automobile policy. However, an employer’s uncertainty about what specific EPL claims are covered may lead the employer to hesitate in tendering a claim to the EPL insurer ...?until it is too late. To avoid this situation, the employer should study the definition of “wrongful acts” in its EPL policy.
Virtually all EPL insurance is written as a named-torts policy. This means there is a positive coverage grant for specific employment-related wrongs, usually defined as “wrongful acts” under the policy. This definition is at the heart of EPL coverage.
?The most common EPL “wrongful acts” are the following:
See?Employment Practices Liability, Second Edition , Chapter 1 (National Underwriter) for a more detailed analysis.
领英推荐
Because EPL policy language varies by insurer, it is vital to double-check the specific “wrongful acts” covered under your particular policy. For example, in?Krueger v. Royal Indemnity Co.,?481 F.3d 993 (7th Cir. 2007), the EPL policy defined “wrongful act” to include “breach of any oral employment contract.” While this coverage went beyond the standard “wrongful acts,” the court still required that the underlying contract claim be based upon an employment contract. Because the underlying suit was for breach of a shareholder agreement instead of an employment agreement, the court found no coverage. “The shareholders' agreement is applicable to any shareholder, including an employee, but that doesn't make it an employment agreement.”
Finally, although wage and hour claims are excluded by most EPL policies, some insurers offer endorsements with full or partial wage and hour coverage. Because of the increasing frequency and severity of wage and hour claims, most employers find this coverage to be an excellent investment.
Therefore, prudent employers will carefully review the definition of “wrongful acts” in their EPL policy, during policy negotiations, to ensure that their principal employment exposures are covered. And, once the policy is issued, they’ll ensure that key people know what “wrongful acts” are covered, so potentially-covered claims are timely reported.?
For a comprehensive analysis of common EPL insurance policy provisions, as part of a larger risk-management strategy, consider an?EPRM webinar ?for your managers.?
Corporate Strategist-Insurance Manager-GRC Specialist
2 年Great job and always informative, Brit. I appreciated that you included the wage and hour claim trend and how valuable it is for employers to consider coverage to address them.
Professional Liability Services- a Complete list of Corporate and Volunteer Positions is below
2 年Nicely done- but let's not forget that Discrimination or Harassment to non- employees, i.,e commonly referred to as 3rd Party coverage, is often, but not always, automatically included. Also, the definition(s) of what is a 3rd party vary, sometimes limited to only to customers of the Insured, (substandard) but more often defined as being "anyone with whom the Insured interacts (best version). No 2 policies are alike and vary as to ERP's, and limitations on the claim reporting requirements in notifying the company of any "claim", the definition of Claim (which may or may not require knowledge by the insured that a claim has been asserted) to name a few of the issues for review.