Employment Practices Liability Insurance

EPLI Coverage

Employment practices liability insurance (EPLI) covers employers against claims by employees alleging wrongful employment practices such as discrimination, harassment, wrongful termination, retaliation, and wage and hour violations. The line has grown significantly as employment-related litigation has increased. EPLI policies are typically claims-made with defense costs inside the limits. Coverage may extend to claims by applicants, former employees, and third parties (such as customers alleging harassment by employees). Deductibles and self-insured retentions help manage the frequency of smaller claims.

Pricing Methodology

Actuaries pricing EPLI analyze the employer's industry, size (number of employees and revenue), geographic distribution of employees, workforce demographics, HR practices, and claims history. Industries with high employee turnover, significant customer interaction, or history of regulatory scrutiny tend to have higher claim frequency. Jurisdiction is important because employment laws, jury attitudes, and damage caps vary significantly by state. Claim severity distributions have thick tails, with occasional large verdicts or settlements skewing average costs. Actuaries model frequency and severity separately, with attention to trends in employment litigation driven by evolving legal standards, social movements, and regulatory enforcement priorities. Class action and multi-plaintiff claims require separate analysis due to their distinct severity characteristics.