Employment Practices Liability: Protection Against Personnel-Related Lawsuits
By Thomas K. Coughlin, AAI, Air-Sur, Inc
Today, good, smart business leaders are effective risk managers. But, an essential part of being an employer, hiring, maintaining and firing employees, has grown over the past decade as an area in which some of the greatest risks, and subsequent losses, have set back or permanently crippled otherwise successful businesses because they did not insure against potential losses. Like all other areas of risk management, employment practices requires a business leader to know all the rules, follow them carefully and have the resources to fight it out in court, if needed, should something go wrong anyway. In many cases, defending such actions requires a new type of insurance.
Insurance Policies That Cover Your Personnel Policies.
Even the best personnel policies can’t prevent a lawsuit, especially the type that is designed to extract revenge or as a part of a fishing expedition. That’s where insurance that covers this type of liability becomes even more important. Many employers erroneously believe their general liability, directors’ and officers’ and/or workers’ compensation policies will protect them in such circumstances. In most cases, they’re wrong and they’re facing a risk they wouldn’t otherwise tolerate. In the past, the above mentioned insurance coverages might have been adequate. But with the rise in employment practices litigation and the large amounts being awarded plaintiffs, many insurers are specifically excluding such legal matters under their policies. Specific employment practices liability insurance polices, in many cases, are the only effective protection against personnel-related lawsuits today.
An Emerging Marketplace.
Such policies are being offered by a number of insurance companies now. Generally, they are activated early in the complaint process to allow proper defense representation and cover legal costs, settlements and judgments, to a specified limit, in cases related to hiring, employment and termination. Without these insurance policies, companies often have found themselves digging deeply into resources to pay for legal services and/or settlements. Many don’t have those resources, and the potential for disaster in such cases is enormous.
The vast majority of businesses are not insured for employment practices liability exposures. The problem has developed so quickly and is so complicated that many simply aren’t aware of the real exposures that exist. We will be working closely with you to help manage and insure these risks cost effectively.