Learn the key differences between employment practices liability insurance (EPLI) and workers’ compensation insurance. Understand what EPLI covers and why it doesn’t apply to workers’ comp claims.
Table of Contents
Question
A worker’s compensation lawsuit has been filed against a company. The owner is not concerned because he has employment practices liability insurance (EPLI). What should the owner know about EPLI?
Answer
It does not cover claims rising under workers’ compensation.
Explanation
Employment practices liability insurance (EPLI) does not cover claims arising under workers’ compensation laws. EPLI and workers’ compensation are two distinct types of insurance that cover different scenarios:
- EPLI provides coverage to employers against claims made by employees alleging discrimination (based on sex, race, age or disability), wrongful termination, harassment and other employment-related issues. It protects the company against lawsuits related to the employer-employee relationship and HR practices.
- In contrast, workers’ compensation insurance provides coverage for employees’ job-related injuries and illnesses. It compensates workers for medical expenses, rehabilitation costs, lost wages, and other benefits when they suffer an injury or occupational disease in the course of employment, regardless of fault.
Workers’ comp insurance is state-mandated for most businesses and claims are handled through a separate workers’ compensation system, not through lawsuits. EPLI, on the other hand, is optional coverage that protects companies against employee lawsuits.
So in this scenario, the owner should be concerned because the workers’ compensation lawsuit is not covered under their EPLI policy. The two types of insurance are mutually exclusive. The owner will need to rely on their workers’ comp insurance to handle this claim, not EPLI. Employers should understand the differences between these coverages.
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