What are the most important factors to consider when purchasing EPLI?

Prospective insureds should actively negotiate EPLI coverage, focussing on coverage enhancements and conditions related to defense and settlement. An employer should particularly consider whether the policy contains the following terms:

• Broad-named definition of who is insured, including temporary and contract employees.

• Ambiguous definition of claim.

• Broad definitions of discrimination, sexual, harassment and wrongful termination.

• An extended reporting period that lasts 3 years or longer.

• Insured is involved in selection of counsel.

• Carrier cannot settle claim without insured's consent.

• Absence of exclusions for:

  • breach of implied contract

  • change in operations

  • class action suits

  • intentional acts

  • punitive damages.