If you are a business owner, Employee Practices Liability Insurance may be something you want to consider. Unfortunately, many people overlook this type of insurance because they already have Workers’ Comp. Confusing the two different types of insurance can be a big mistake and can end up costing you money. But what exactly is Employee Practices Liability Insurance and what is the difference between it and workers comp? Let’s take a look.

What is Employee Practices Liability Insurance?

This type of insurance coverage helps to cover the costs of any legal fees if you should ever be sued by an employee or contractor. It can help to protect your business against things like sexual harassment suits, discrimination claims, retaliation claims, wrongful termination cases, or deprivation of career opportunity charges.

Many people often skip this type of insurance because “it would never happen to me”. But remember, you can be faced with an accusation whether you are guilty or not. All it takes is one disgruntled employee to throw an accusation your way for you to face years of legal fees and investigation costs.

Who is covered under Employee Practices Liability Insurance?

Protection insurance usually covers claims made against any of your management personnel. In some cases, it may also protect other employees. Employee Practices Liability Insurance protects against claims made by employees and former employees, job candidates, temporary staff, and independent contractors. It also protects against claims made by customers and vendors.

When are wrongful employment claims usually filed?

An employment suit can be filed against you at any time. With that being said, they are commonly reported during the hiring and recruitment process or during offers of employment, during training and orientation, performance reviews, and termination.

What’s the difference between Employee Practices Liability Insurance and Workers Comp?

The confusion between these two forms of insurance stems from people thinking that workers comp covers everything. It doesn’t. There are two parts of Worker Comp. First, it pays for your employees’ medical bills and lost wages if they face a work-related illness or injury. Secondly, it pays for legal expenses if an employee is ever injured at work due to negligence on behalf of the employer. And this second part is where people often confuse Workers Comp with Employee Practices Liability Insurance. Where Workers’ Comp covers legal expenses against injury, Employee Practices Liability Insurance covers legal expenses against allegations.

Do I need Employee Practices Liability Insurance?

If you are a business owner, small or large, you need Employee Practices Liability Insurance. In cases of allegation, people can make a claim regardless of whether you are guilty or not. So being a good person and following all the rules doesn’t necessarily mean you are safe. In addition, you can’t predict the behavior of your management team. As mentioned previously, all it takes is one upset employee to cost you thousands in legal fees – guilty or not. So, when it comes to protecting yourself and your business, it’s always better to be safe than sorry.