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EPLI Policy Limits: What Level of Risk Should You Take On?

Director of People at HNI 

We recommend employment practices liability insurance (EPLI) for most companies, even those with rock solid HR policies and procedures.  Why?  Because unfortunately, claims brought against your company don’t have to be true to be costly.

Even the most frivolous of lawsuits may still require your company to hire a lawyer, prepare your case, and spend time in arbitration or in court. It’s common for judgments to be in the six figures, and depending on the allegations, they can creep into the millions.

Typical Cost of EPLI Claims

epli_Policy_limitsOpinions vary on what levels of EPLI coverage is appropriate. You have to carefully weigh the likely cost of a claim and the highest possible cost of a claim – and these are two very different numbers.

EEOC statistics show that 81 percent of claims settle for between $22,400 to $40,500 – but the other 19 percent can be very large.

Some general liability policies may come bundled with low levels of EPLI coverage, typically with limits of $100,000 per claim and $300,000 aggregate. In our experience, most businesses would benefit from carrying higher limits than this, and we advise many of our clients to obtain monoline EPLI coverage.

Recommended EPLI Policy Limits for Those With No Major Risks

To our clients with no apparent EPLI risk factors, we generally recommend they carry a minimum of half a million dollars in EPLI coverage. This covers much of the scope of possible damages that could be leveled against companies that are about the size of most of our clients.

For very large companies or companies with any indication of specific risks, these limits should be much higher.

Related Content: 5 Risk Factors That May Indicate a Need for EPLI Coverage

The Bottom Line: How Much Risk Can You Take On?

The question you should ask yourself when evaluating what limits are worth paying for is this: “How much is my business worth, and how much could we afford to lose fighting an EPLI claim?”

At the end of the day, that’s the level of coverage needed in an EPLI policy to ensure your business is protected.

Learn more about your EPLI risk

The cost you can expect for an EPLI policy will vary based on your industry, the size of your company, and any risk factors indicated by your claims history. If your company has been sued for its employment practices in the past, this will certainly have a negative impact on your rates.

If you have questions on EPLI or would like to learn more, contact your Relationship Manager at HNI.  Or, post your question in the comments – we’re always happy to help!


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5 Signs You NEED Employment Practices Liability Insurance   [Free 5-page White Paper] 

Topics: HR / Employee Benefits