Employer's Liability & Employment Practices Liability Aren't the Same

For employers, distinguishing between Employer's Liability and Employment Practices Liability is crucial. Both forms of coverage play significant roles in safeguarding businesses against costly claims, yet they are distinct and require deliberate consideration.

Employer's Liability Insurance

Employer's liability shields employers from legal liabilities stemming from employee injuries not covered by workers' compensation policies. It's vital to recognize that while workers' compensation covers the worker, it doesn't extend to all liability scenarios. Here are four common types of liability suits against employers:

1. Third-Party Over Actions: These lawsuits are initiated by third parties seeking indemnity after being held liable for an employee's injury. For instance, if an employee is injured due to poorly maintained machinery, they may sue both their employer and the equipment manufacturer.
2. Loss of Consortium: This type of lawsuit is typically filed by an injured employee's spouse, claiming loss of the injured spouse's services due to workplace injury.
3. "Dual Capacity" Suits: In these cases, an injured employee sues their employer as a manufacturer when the injury is linked to a product made by the employer.
4. Consequential Bodily Injury: These lawsuits arise when a family member sues for injuries suffered due to the employee's injury, such as a spouse experiencing health issues upon learning of their partner's severe injury.

Employer's liability coverage is particularly crucial in states with monopolistic workers' compensation coverage or those allowing self-insurance. Employers should discuss this coverage with their insurance agents to ensure comprehensive protection.

Employment Practices Liability Insurance

On the other hand, Employment Practices Liability Insurance (EPLI) addresses wrongful acts arising from the employment process. This coverage encompasses claims like wrongful termination, discrimination, sexual harassment, and retaliation, as well as other inappropriate workplace conduct such as defamation, invasion of privacy, and failure to promote.

It's essential to note that EPLI is typically excluded from umbrella coverage. Employers shouldn't assume coverage under umbrella policies and must ensure they have separate EPLI coverage.

In summary, understanding the distinctions between Employer's Liability and Employment Practices Liability is vital for comprehensive risk management. Employers should regularly review their insurance coverage with their agents to ensure adequate protection. If an agent hasn't provided such guidance, it may be time to seek out a new one.

Now that you know the difference, which one does your business need? Reach out to one of our TPG Commercial Insurance Specialists by calling 909.466.7876 for more information on the coverages we offer.

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