Employment practices liability policies cover claims arising out of employment activities such as hiring and firing. Typical allegations arising out of these activities include discrimination, wrongful termination, failure to employ or promote and retaliation.
Allegations may include additional claims that these wrongful acts caused consequential injures such as mental anguish, humiliation, libel, slander or invasion of privacy.
The CGL policy generally will not cover these claims. Exclusion "o" under Coverage A (Bodily Injury and Property Damage Liability) excludes bodily injury (including consequential BI) arising out of personal and advertising injury. Coverage B (Personal and Advertising Injury Liability) may cover the claims, except that most policies contain endorsement CG 26 39 (Employment Related Practices Exclusion) or its equivalent to effectively exclude such claims.
EPL policies generally specify the types of claims covered by the policy. If an employee’s allegation against the insured is not specifically listed in the policy, then the policy may not apply. Many EPL policies on the market today don’t cover consequential injuries, and that may leave a gap in your policyholder’s protection.
A good way to distinguish one EPL policy from another is to list the covered acts in each policy and compare with a checklist. A good EPL coverage checklist is available from the International Risk Management Institute (www.irmi.com). This activity might help you sell a more expensive policy with better coverage.