Consider this scenario: an employee has an adverse encounter with a customer. As a result, the employer is sued by the customer, alleging harassment or discrimination. Does your business have coverage for costs relating to defense and payments?
Many businesses may think that their commercial general liability policy would cover such a claim; however, general liability coverage must be triggered by bodily injury, property damage, or personal/advertising injury. Based on the terms of a typical general liability policy, there is no coverage afforded for claims of harassment or discrimination.
To cover harassment and discrimination, your business must have employment practices liability insurance (EPLI), which covers employee-to-employer relations, including discriminatory practices and wrongful terminations. The idea is that this policy will offer defense costs, as well as payments for financial damages that are alleged by a disgruntled employee.
But a standard EPLI policy won’t insure against wrongful treatment allegations from customers or other third parties. For third-party allegations of mistreatment, you would need an extended EPLI policy. This is often added as “Agreement B,” but sometimes can be included in your standard policy as an “endorsement.” Talk to your agent or broker about your options so you are fully covered for claims from employees and outside parties alike.
