Coverage Guide — Updated August 2026
Employment Practices Liability Insurance (EPLI)
EPLI protects your business from claims by employees alleging discrimination, wrongful termination, sexual harassment, or retaliation. 40% of EEOC charges target businesses with fewer than 100 employees. The average EPLI claim costs $160,000+ even if you win.
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EPLI protects your business from claims by employees alleging discrimination, wrongful termination, sexual harassment, or retaliation. 40% of EEOC charges target businesses with fewer than 100 employees — and the average claim costs $160,000+ to resolve.
What It Covers ✓
- ✓Discrimination claims (age, race, gender, disability, religion)
- ✓Wrongful termination and constructive dismissal
- ✓Sexual harassment claims from current or former employees
- ✓Retaliation claims following complaints
- ✓HR practices violations (failure to promote, disparate treatment)
- ✓Defense costs for covered employment claims
- ✓Third-party EPLI (harassment by customers or vendors — with endorsement)
What It Does NOT Cover ✗
- ✗Workers compensation claims (separate policy)
- ✗Wage and hour violations — FLSA overtime (requires endorsement)
- ✗Criminal or willful misconduct
- ✗OSHA violations
- ✗Physical assault unrelated to a covered employment practice
Who Needs EPLI?
- →Any business with 5 or more employees
- →High-turnover businesses hiring and firing regularly
- →Hospitality and restaurant businesses
- →Staffing agencies and HR service providers
- →Healthcare businesses with large staff
- →Retail chains and franchise businesses
- →Any business with rapid growth or workforce changes
How Much Does It Cost?
Very small (5–15 employees)
$1,000–$3,000/yr
Small (15–50 employees)
$2,000–$7,000/yr
Mid-size (50–150 employees)
$5,000–$15,000+/yr
High-risk (hospitality, staffing)
Varies by workforce size
Key Terms to Know
EEOC
Equal Employment Opportunity Commission — the federal agency that investigates discrimination and harassment complaints. 80,000+ charges are filed annually; small businesses are as frequently targeted as large corporations.
Claims-Made Policy
EPLI policies are almost always claims-made — coverage applies to claims filed during the active policy period, regardless of when the incident occurred (subject to the retroactive date).
Wage and Hour Endorsement
An add-on that extends coverage to FLSA wage and hour claims — not included in standard EPLI. These are among the most common employment lawsuits facing small businesses today.
Third-Party EPLI
An endorsement covering harassment or discrimination claims from non-employees — customers, vendors, or contractors. A customer alleging a staff member harassed them is a third-party EPLI claim.
Defense Costs
EPLI typically pays defense costs in addition to the policy limit (outside limits) — unlike some professional liability policies where defense erodes limits. Defense costs alone average $50,000–$100,000 before any settlement, making EPLI coverage critical even for businesses that ultimately prevail.
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