Posted on May 19, 2014
Increasing employee litigation is a risk that many small and mid-sized businesses face. Court awards and settlements can be expensive, and without the appropriate insurance coverage, a company?s complete operation is at risk financially. If a company should have to pay a claim out of pocket, their bottom line would be greatly affected.
At any time, business owners can experience an employee?s dissatisfaction with their position or management. In some situations, these concerns can turn into claims and lawsuits that could potentially devastate a company financially. The commercial general liability policies that most companies possess will not provide insurance protection for these types of allegations made by employees.
Instead, companies must seek this type of protection from employment practices liability insurance. This coverage was designed to provide employer protection from employee claims of discrimination, wrongful termination, harassment and emotional distress.
From the moment an employee makes a claim, the costs start to add up. Claims can take months and even years to settle, and the legal defense fees are expensive. Employment practices liability insurance pays to cover all these expenses and even includes coverage for directors and officers without the need to purchase a separate policy.
Another factor to consider with employment practices liability is legal representation. Some carriers will allow business owners to choose their own counsel. Ultimately, the most important aspect of choosing employment practices coverage is evaluating the company?s potential risk.
Discuss the options for employment practices insurance with insurance professionals who can assist in determining the right amount of coverage. Policies differ between insurance companies so while one company may have a basic, standardized policy, other insurers offer additional options such as coverage for punitive damages and fines.