D&O Insurance with EPLI Cover – What it Does?

In all private organizations, small or big, directors and senior officers shoulder significant responsibilities. They make key decisions, deal with various stakeholders, and ensure that the business follows the right path to success. However, their position or role in the organization makes them vulnerable to the risk of lawsuits from various stakeholders. D&O insurance covers such situations. 

It has also been found of late that a rise in bankruptcy and fraud cases has pushed more Indian companies to buy D&O insurance.

This insurance product provides comprehensive cover for a wide range of litigation. It also comes with several add-ons or extensions with which business owners can get additional benefits other than basic policy inclusions. 

One such extension is EPLI. Let’s dig deeper to find out more about it.

What is EPLI Insurance Cover?

Employment Practices Liability Insurance, commonly known as EPLI, covers the defense and settlement cost, which would otherwise be incurred by an employer while dealing with lawsuits filed by one of their employees. 

A lawsuit filed by an employee against the directors or the organization can cause hefty losses. This makes this cover highly significant as a risk mitigation solution. 

Consider this example to get a clear idea of EPLI–

An employee working at ABC Pvt. Ltd. filed a defamation case against the firm for wrongful termination. He accused the company’s management of intentionally terminating his employment without prior notice and defaming him at another employer. 

In such a lawsuit, the company owners would have to fight the case by hiring a lawyer, paying for the court fees, and any final settlement expenses. All this can cause a huge loss unless the company has bought D&O insurance with EPLI cover. 

EPLI cover helps in mitigating the risk of litigation that could be filed by the employees of the company. Other than defamation, the typical allegations behind such lawsuits include breach of employment contract, sexual harassment, inappropriate workplace conduct, and negligent evaluation. For private companies, D&O insurance has become a necessity in the current fast-paced, competitive business environment. Because of the educated and aware employees today, the best thing a company can do is to stay prepared for such eventualities with an EPLI cover.

Is EPLI Included in D&O Insurance?

Several different insurance companies offer D&O insurance for private companies and have specific terms in place for these policies. By default, EPLI cover forms an integral part of most of these policies, but not for all. When one’s policy does not offer this cover one can buy it as an add-on by paying a slightly higher premium. 

One can even find this cover available as a stand-alone policy where it provides broader coverage to all the employees, not just the directors of an organization. 

In either case, it is crucial to check if your chosen insurance company offers EPLI as an inclusion in your D&O insurance policy or else as a stand-alone policy.

What are some ways to prevent employee-related lawsuits

With a D&O insurance policy that includes EPLI cover, private companies can be adequately prepared to deal with eventualities of the type described above. However, it is also crucial for them to attempt to prevent lawsuits. Here are a few ways in which this can be possible:

  • Maintaining a healthy working environment inside the workplace
  • Having an employee handbook designed to define rules and regulations that every employee must follow
  • Ensuring that all employees feel motivated when at work
  • Rewarding teams and specific team members for their contributions at work

It is a good practice to check for EPLI cover in the inclusions of a D&O insurance policy while buying one. If you are looking for a suitable D&O policy for your private company, connect with SecureNow. As an award-winning insurance broking firm, we will help you find the right commercial insurance policies related to your business.

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