Medical Professional Liability Insurance

Employment-Related Practices Liability Insurance (EPL)

You say you’ve never heard of this before? Don’t feel bad. However, this is one of the fastest growing areas of liability insurance! I am sure you have heard of the “issues” this type of policy is designed to insure. Examples are: Sexual Harassment, Violation of Civil Rights, Wrongful Termination and Discrimination - based on sex, race, religion, age, pregnancy and disability (Americans with Disabilities Act - watch this one) or life threatening disease.

Here is the problem. Note the following definitions:

• Discrimination - Failure to hire, promote, demotion, or the employment related defamation of any employee because of race, creed, national origin, sexual orientation/preference, religion, age, gender, disability, handicap or pregnancy.
• Sexual Harassment - Unwelcome sexual advances, request for sexual favors or other conduct of sexual nature when such behavior affects an individual’s employment.

Do these definitions seem vague to you? This is a big part of the problem. It is too easy for a complaint to fit these definitions.

What do these policies normally exclude?

• Dishonest, fraudulent, criminal or malicious intent by the insured.
• Liability assumed under a contract.
• Bodily injury, sickness, disease, loss of consortium or death, but not emotional distress, mental anguish or humiliation.
• Property damage.
• Workers Compensation, ERISA, COBRA, disability benefits or similar laws.
• Equitable remedies, including injunctive relief or criminal proceedings.
• Employment termination after bankruptcy, plant closure, layoffs or merger.

The Americans with Disabilities Act (ADA) and similar legislation have increased employer’s obligations to their employees and job applicants. In 1992 sexual harassment claims were up over 50% from the previous year, according to the EEOC. Also, over zealous sympathetic jurors are contributing to ever-increasing settlements and award costs. Personnel procedures and policies are subject to greater scrutiny than ever before. Simply following good personnel practices does not guarantee the elimination of EPL claims. Businesses must defend themselves even against groundless allegations, which can be a process that is time consuming, emotionally draining and very expensive. It is absolutely critical to know that general liability and workers compensation policies offer inadequate or no protection against EPL related claims.