It is not uncommon for disgruntled workers to file claims against their employers. This is why it is essential for businesses to have employment practices liability insurance. Lawsuits are financially draining, and liability insurance can offer companies the protection they need.
What Does Liability Insurance Cover?
Liability insurance covers a variety of claims, including:
- Workplace harassment
- Invasion of privacy
- Reputation claims, specifically defamation
- Failure to promote
- Breach of contract for employment
Employment practices liability insurance policies cover directors and officers, management personnel, and employees as insured. Most policies do not extend coverage to include bodily injury or property damage.
The Terms of a Liability Insurance Policy
Liability insurance policies are usually written on a claims-made basis. Therefore, claims must be reported to an insurance provider while a policy is still in effect. The event that led to the claim must have also occurred during a certain timeframe. Some providers offer retroactive dates and service for earlier claims, and businesses should review the particulars of their policy to see if these options are available to them.
Why Businesses Need Liability Insurance
If businesses do not have employment practices liability insurance, they should secure coverage immediately. It is impossible to know when claims will arise, but companies do not want to be unprepared when they do. Liability insurance can protect their financial assets and cover the settlement and defense costs that accumulate over the course of a lawsuit.