Many independent insurance agency owners wonder if Employment Practices Liability Insurance (EPLI) is a necessary expense. Unlike Errors & Omissions (E&O) insurance, EPLI is not a required policy. However, if your agency has employees, the answer is simple: yes, you need it.
Even when an agency diligently follows employment and discrimination laws, there’s no guarantee against allegations. Defending against such claims can be costly—often far exceeding the price of an EPLI policy. The following real-life scenarios demonstrate how EPLI can be a financial lifesaver for insurance agencies.
A small agency employed the son of its former owner. The father had sold his shares to a long-time employee, becoming an employee himself under the new ownership. Despite past tensions, the son returned to the agency post-sale but quickly clashed with other employees, the new owner, and his father. Tensions culminated in a heated incident that led the son to call the police.
The next day, the new owner terminated the son — unaware that a workplace violence complaint had already been filed with OSHA. The son later filed a formal complaint with the U.S. Department of Labor, alleging retaliation. What followed was a lawsuit against the agency.
Another agency hired an employee, “E,” to perform in-office work. Unfortunately, tasks had to be redone due to poor performance, and E faced repeated issues with misconduct. When the pandemic began, E refused to return to the office due to health concerns and requested a voluntary layoff, which the agency granted.
Months later, E was informed of a permanent layoff due to business restructuring. Although E’s duties were absorbed internally and no replacement was hired, E filed a complaint, alleging discrimination, failure to accommodate a medical condition, and retaliation.
In both cases, the agencies had wisely purchased EPLI coverage as an add-on to their E&O policies. When the claims were filed, the insurers stepped in, providing full legal defense at minimal out-of-pocket cost.
Unpredictable employment issues can arise at any time, even for well-run agencies. EPLI provides critical protection against legal claims related to termination, discrimination, retaliation, and more. For independent insurance agencies, this coverage can be the difference between financial stability and a costly legal battle.
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