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Minimizing Risk in Self-Storage: Employment Practice Liability Insurance

Tiffany Luongo Comments
Continued from page 1

Generally, a policy covers eligible losses stemming from such causes of action and attorneys’ fees. And the insurer will provide the services of attorneys who specialize in defending against such claims, significantly increasing the likelihood that employers will prevail in the event litigation does occur.

Maybe you think your facility’s commercial general liability (CGL) policy protects you in such situations. Not so. In most cases, CGL policies specifically exclude employment practice claims. CGL policies protect your business against losses resulting in bodily injury or property damage. Employment practice claims generally involve injuries that are mental, emotional and economic in nature and are, therefore, outside the range of protection offered by CGL insurance.

What does an EPLI policy typically cover? The most common situations include:

  • Discrimination and retaliation
  • Sexual and general workplace harassment
  • Negligent hiring
  • Breach of employment contract
  • Wrongful termination, dismissal or discharge
  • Violations of the Family and Medical Leave Act
  • Situations involving defamation, libel and slander
  • Denial of training or deprivation of seniority

Most commonly purchased as a stand-alone policy or an endorsement to a directors and officers policy, an EPLI policy is generally available in claims-made format, meaning the policy will cover only those claims that occur and are reported made during its term.

An EPLI policy also requires the insured give prompt notice to the carrier as soon as the insured becomes aware of facts or circumstances that might give rise to a claim. Most EPLI policies are subject to a single-policy aggregate limit of liability covering both defense and indemnity, meaning the costs of defending against a claim will diminish the amount paid to cover settlements or judgments.

Some carriers will allow an insured to purchase defense as well as policy limits, thereby placing the litigation defense costs outside the amount available for indemnity. Ultimately, the best course of action is to consult your insurance agent to assist you in choosing the policy that suits your business’s needs and provides you with the appropriate level of protection.

As with any liability policy, EPLI may not cover certain risks including:

  • Risks covered by other policies, such as a CGL
  • Intentional, criminal, fraudulent or malicious acts
  • Contractual liability
  • Strikes and lockouts
  • Violations of the Occupational Safety and Health Act

Keep Up Training

Of course, EPLI insurance should be considered only the last line of defense in a healthy business’s battle against workplace liability. Regularly providing your employees with comprehensive training can substantially reduce the risk that they will engage in the sort of illegal or unethical behavior that may lead to litigation.

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