Vanni Foundation >

Business Insurance 101: Employment Practices Liability

Operating a business comes with plenty of risks, such as natural disasters, theft, and potential lawsuits from employees. You don’t know when something might occur that could jeopardize your company’s…

November 18, 2022

Written by Justin Sloan

Operating a business comes with plenty of risks, such as natural disasters, theft, and potential lawsuits from employees. You don’t know when something might occur that could jeopardize your company’s future. Therefore, having business insurance is essential to help protect you from the unexpected. Any company, no matter its size, can benefit from having business insurance. 

There are many different types of business insurance, each designed to protect you in a specific way. One of the most critical policies is employment practices liability, especially for companies with many employees. But how exactly does it work

This blog post will discuss business insurance, what it is, how it works, and the different types of coverage available. We’ll also delve deeper into employment practices liability and explain in what situations this policy would be beneficial for your business. Whether you’re a new entrepreneur or have been operating for a while, keep reading to make an informed decision about insurance.

What Is Business Insurance, And How Does It Work?

Business insurance is a vital part of any company’s risk management strategy. It’s a broad term that refers to the various policies businesses can purchase to protect themselves financially. These policies cover different risks, including but not limited to the ones mentioned above. Companies can purchase insurance for a specific threat or buy bundles that cover multiple risks.

When you purchase a business insurance policy, you pay a premium to the insurer in exchange for protection. Suppose something happens that your policy covers, and you need to make a claim. In that case, the insurer will reimburse a certain amount to help pay for the cost of damages. This way, your business will likely stay afloat financially after an unexpected event. You can also have more confidence knowing that you have a backup plan.

Different Types Of Business Insurance

Many different types of business insurance are available, each designed to cover a specific risk. Some of the most common policies are:

  • Property Insurance: Property insurance covers damage to your business’s physical property, such as the building, equipment, and inventory.
  • Liability Insurance: This insurance protects your business from claims of negligence or damages caused by your company’s products or services.
  • Business Interruption Insurance: This policy is also called “contingent business interruption insurance.” It can help cover lost income and expenses if your business closes temporarily due to a covered event, such as a fire.
  • Product Liability Insurance: If you manufacture or sell products, product liability insurance can protect you from lawsuits related to defective products or injuries caused by them.
  • Vehicle Insurance: Companies that use vehicles for business purposes should purchase commercial vehicle insurance. It covers damage to the cars and injuries sustained by employees while driving them to work.
  • Employment Practices Liability Insurance: This policy can help protect your business in an employment-related claim, like wrongful termination or sexual harassment. We’ll further discuss employment practices liability later on.

Things To Consider When Buying Business Insurance

Now that you know more about business insurance, it’s time to start thinking about what coverage might be right for your company. Here are some things to remember when shopping for business insurance:

  • Your Business Type: Different businesses face different risks. Make sure to purchase a policy that covers the specific risks associated with your industry.
  • Your Business Size: Small businesses typically have different needs than larger ones. For instance, a small business might not need product liability insurance if they don’t manufacture or sell products.
  • Your Business Location: Your business’s location can also affect your risks and, as a result, the coverage you need. If you’re in an area prone to natural disasters, you may want property insurance that covers floods or earthquakes.
  • Your Budget: Insurance premiums can vary widely, so it’s important to find a policy that fits within your budget. Remember that the cheapest policy might not offer the best coverage for your circumstances.

Cost Of Business Insurance: Is It Worth The Investment?

Many factors go into determining the cost of business insurance. However, businesses of all sizes and industries can find cost-effective policies that meet their needs. There are several different insurers in the market, and they all have different rates

Take the time to compare rates from multiple insurers before deciding. As we mentioned, the cheapest policy might not be the best fit for your business, so you should try to find a balance between coverage and cost. In the end, remember that business insurance costs are an investment because they can save you plenty of money if something goes wrong.

What To Do When You Need To File A Claim

You’ll need to file a claim with your insurance company if your business suffers damage or loss due to a covered event. This process can seem daunting, but you must follow the steps outlined in your policy to guarantee a smooth claims process

Generally, the first step is to notify your insurer of the loss. Then, you’ll need to gather documentation and evidence to support your claim, including repair estimates, police reports, or receipts. Once you have all the required documentation, you can submit your claim online or by mail.

Your insurer will send an adjuster to assess the damage and determine if your policy covers it. If it does, they will issue a payment to cover the cost of repairs or replacement. If they deny your claim, you may appeal the decision with your insurer.

What Is Employment Practices Liability?

Employment practices liability (EPL) is a type of business insurance that aims to protect businesses from lawsuits related to the workplace. EPL policies can vary regarding what they cover and how much protection they offer. Some policies only cover specific employment-related claims, while others provide more comprehensive coverage. It would be best if you read the fine print of your policy to understand what is and isn’t covered.

EPL insurance is necessary for businesses with employees, as they’re more likely to face employment-related lawsuits. If you have questions about EPL insurance or whether it’s right for your business, you can always contact an insurance agent.

What Makes EPL Different From Employment Liability Insurance

Employment liability insurance handles claims from employees that suffer injuries in the workplace. On the other hand, EPL insurance is specifically for claims from employees who allege you’ve mistreated them. While businesses should consider both types of coverage, they serve different purposes.

What Does Employment Practices Liability Cover?

EPL policies can cover a wide range of employment-related claims. Employees might file a lawsuit against their employer for many reasons. Here are some of the most common:

  • They believe they were passed over for a promotion or raise because of their protected characteristics (e.g., gender, race). 
  • They’ve been the victim of sexual harassment from a supervisor or coworker. 
  • They’re unhappy with the conditions of their employment contract and believe you fired them in violation of it.
  • You’ve punished them after reporting misconduct or filing a complaint.


Of course, these are just a few examples. It’s important to note that EPL policies typically limit the amount they will pay for a claim. Therefore, having other types of insurance (like general liability or workers’ compensation) is recommended to supplement an EPL policy.

How To Avoid These Claims In Your Business

There are a few things you can do to avoid these claims in your business:

  • Have clear policies and procedures regarding discrimination, harassment, and retaliation.
  • Ensure your employees know these policies and how to report any incidents.
  • Investigate any complaints promptly and take appropriate action if necessary.
  • Provide training for managers and supervisors on preventing and handling workplace disputes.


Even when you take all the necessary precautions, there’s always a risk that an employee will file an EPL claim against you; that’s where insurance comes in.

What Businesses Require This Policy, And How To Shop For One?

All businesses can benefit from EPL insurance, but some must carry this coverage by law. Many states require companies with a certain number of employees to have EPL insurance – and if your business has government contracts, you might also be required to have this coverage. 

When you’re ready to shop for an EPL policy, think about your desired amount of coverage. The coverage you need will depend on your business size and industry. You should also consider the most common types of claims in your industry and guarantee that your policy covers them.

Nesso Insurance – Insurance Services For You And Your Business

At Nesso Insurance, we understand that every business is different and has unique insurance needs. We’re an insurance agency in Connecticut that prioritizes making your insurance experience enjoyable. We’ll work with you to find a customized policy so you can avoid the hassle of comparing and searching for one. Unlike other insurance agencies, we don’t just see you as a number. We deeply care about our clients and always put your best interest first. 

We’re part of the Nesso Group, which offers individuals and businesses a broad range of solutions, including insurance, taxes, wealth, accounting, and more. Our desire to assist clients in every way possible sets us apart from the competition. Regardless of your business stage, the Nesso Group can give you the help and guidance you require.


Subscribe To Our Blog


Read More Entries

Let’s Talk About
What’s Important To You


Our approach to integrated solutions and comprehensive services alleviates stress and elevates success. We provide guidance across multi-dimensional areas of expertise for individuals and businesses. You can trust that we’re working together with your best interest in mind.

Image Item


Image Item


Image Item


Image Item


Image Item


Image Item


Call Now Button