60% of Business Owners Think They're Covered for This. Most Aren't.

Quick Answer

Employment practices liability insurance (EPLI) protects businesses against employee claims of wrongful termination, discrimination, harassment, and retaliation — none of which general liability insurance covers. The average small business premium is $257/month, while the average cost to defend even a baseless claim runs $10,000 or more. Nearly 60% of business owners without EPLI mistakenly believe they're already covered. Here's a stat worth sitting with if you employ anyone at all: nearly 60% of business owners without employment practices liability insurance believe they already have this covered under their existing policy. They don't.

The Coverage Gap, Specifically

General liability insurance covers physical risks — injuries, property damage. It has nothing to do with a former employee alleging wrongful termination, a current employee filing a harassment complaint, or a rejected job applicant claiming discriminatory hiring practices. That's an entirely different risk category, and it requires employment practices liability insurance (EPLI) — sometimes bundled into a broader management liability policy alongside directors and officers (D&O) coverage.

The Numbers Behind Why This Matters Now

• Nationally, the EEOC receives roughly 250 employee charges per day, and roughly a third of annual charges are filed against small businesses specifically. The median cost of an employment practices claim has grown from $83,000 in 2015 to over $258,500 in recent years — a 211% increase that significantly outpaces inflation. Even claims that never go to trial cost real money to defend — the average legal defense cost for a nominal, ultimately-baseless claim still runs $10,000 or more. The most common charge type is retaliation (47.8% of all charges), followed by disability discrimination (38%) and race discrimination (34.2%) — many charges allege more than one basis at once.

What EPLI Actually Covers

A standalone EPLI policy typically covers legal defense costs, settlements, and judgments related to claims of wrongful termination, discrimination, sexual harassment, retaliation, and failure to promote — regardless of whether the claim ultimately has merit. Coverage limits typically range from $1 million to $25 million, and policies usually carry a retention (deductible) in the $10,000-$25,000 range for smaller businesses.

A Word on BOP Endorsements

Some Business Owner's Policies offer EPLI as an add-on endorsement rather than a standalone policy. It's worth checking the actual limit on that endorsement before assuming it's sufficient — many BOP endorsements cap out around $50,000, which barely covers legal defense costs alone for a single claim, let alone a settlement.

What It Costs

The average small business premium for EPLI is $257/month, with most businesses paying between $750 and $14,000+ per year depending on industry, employee count, and claims history. Industries with higher turnover — retail, healthcare, hospitality — tend to pay more, reflecting a genuinely higher claim frequency in those sectors. Curious whether your current policy actually includes meaningful EPLI protection, or just a thin endorsement? Contact North Shore Insurance Associates for a plain-English review. This article is educational and general in nature. Coverage limits, retentions, and pricing vary by carrier, industry, and claims history — speak with a licensed agent for guidance specific to your business.

Frequently Asked Questions

Does general liability insurance cover employee lawsuits? No. General liability covers physical injury and property damage claims, not employment-related claims like wrongful termination, discrimination, or harassment. That requires a separate employment practices liability (EPLI) policy. How much does EPLI insurance cost for a small business? The average premium is about $257 per month, with most small businesses paying between $750 and $14,000+ annually depending on industry, employee count, and claims history. What's the most common type of employment practices claim? Retaliation is the most common charge type nationally, cited in 47.8% of EEOC charges, followed by disability discrimination (38%) and race discrimination (34.2%).