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    Why Do I Need Employment Liability Insurance?

    Posted by Chris Howard on Sep 18, 2021 6:04:45 PM



    Running a business has enough challenges for any business owner. 

    When outside lawsuits stemming from things out of your control threaten your business, those challenge levels rise in an unwanted hurry.

    Having the right protections in place will give you peace of mind while the legal action against you, an employee, and/or your company takes suit.

    Employment practices liability insurance is a type of business insurance that protects employers from the expenses of being sued (legal costs, settlements, damages) by employees for the actions which they take on behalf of their business.


    There are four main pillars to this coverage:


    1) Discrimination

    2) Wrongful termination

    3) Harassment

    4) Third Party


    We will explore each pillar, including what it covers and how you can protect your company with employment practices liability insurance. 



    It's important to have processes in place for the elimination of discrimination, but it is just as crucial that you protect yourself from potential problems.

    The definition of discrimination in the workplace is behavior that negatively impacts people, and can be based on any number of things, traditionally involving race or gender.

    "Discriminatory practices or policies at work" are examples of behavior that has been shown time and again to have an adverse effect on minority groups, gender groups, or even people living with disabilities. It's important not only because these actions hurt individuals by limiting opportunities but also create a hostile environment where creativity can't thrive; thus productivity plummets . . . not a good recipe for healthy, business growth.

    Though most well-meaning, business owners would not look to discriminate, it doesn't prevent employees from claiming you/your policies did.


    Wrongful Termination

    Though you may take the most careful of steps of documenting work behavior and performance, this doesn't prevent a wrongful termination lawsuit from hitting your business doorstep. 

    When an employee is fired, they may feel hurt or angry. It's important to understand why this happened so the firing doesn't turn into a wrongful termination suit. 

    Bringing a wrongful termination suit usually begins when an employee thinks they are fired for an unjust cause.

    All it takes is a former employee "believing" their employer fired them for unlawful reasons to put your business on the line for having to pay back wages, benefits, and even covering the legal fees of the claimant. 



    Harassment claims made against one employee can sometimes bring trouble to the whole company. That is why it is important for companies to have a clear policy on harassment.

    Harassment at work is defined as any unwanted contact made between an individual and their co-workers.

    This could include physical gestures, emails or phone calls with offensive language, etc., but it also covers anything that makes you feel uncomfortable when someone shares information about your personal life without permission such as “spying” on social networks sites like Facebook for example knowing too many details of where they go during lunchtime even though this might not seem relevant to the job description given by HR department can get really annoying sometimes

    Do you know that four out of five sexual harassment claims are due to just one employee?


    Third-Party Claims

    You could have the best employee, company, products and/or services around, but that doesn't guarantee all the people your company interacts with will experience the same.  if one client, vendor, supplier, distributor, or customer has a bad experience with your company employees, services, or products, you may see a lawsuit. 

    If someone gets sick due to a product, if one of your employees damages the property of a client, or if a supplier slips and falls at your location, it's good to have coverage in place that will cover the expenses related to mitigating these lawsuits. 

    At Insurance for Texans, an independent insurance agency, we get it. We are business owners. We know what type of coverage is necessary and think through the "What is?" along with the "What if?"

    If you're looking for ways to better protect your company or would like more information about employment practices liability insurance, feel free to contact our team!

    Topics: independent insurance agency