The Growing Significance of Employment Practices Liability Insurance

By Dolan, James B., Jr. | Defense Counsel Journal, April 2006 | Go to article overview

The Growing Significance of Employment Practices Liability Insurance


Dolan, James B., Jr., Defense Counsel Journal


IADC member James B. Dolan Jr. is a founding partner of Badger, Dolan, Parker & Cohen in Boston, Massachusetts. This article, which originally appeared in the January, 2006 Employment Law Committee newsletter, discusses employment practices liability insurance.

**********

Employment practices liability (EPL) insurance is a form of coverage specially written to insure employers against liability for claims of discrimination, sexual harassment, and wrongful termination by their employees. Because of their dual role as counsel for others and employers in their own right, lawyers should be familiar with the specifics of this coverage. Plaintiff's counsel should be alert to inquiring about the existence of EPL coverage because it may facilitate settlement of claims and collection of favorable judgments. Insurance defense counsel may be retained to defend for EPL carriers. All defense counsel should carefully explore whether clients who did not purchase an EPL policy might have a right to defense or indemnity under other common policy forms. Coverage counsel may represent insurers, employers, or claimants in EPL coverage litigation. Finally, since lawyers are often employers as well, they may be involved in decisions about purchasing EPL coverage for their law firms.

Anatomy of an EPL policy: EPL is commonly written either on a stand-alone basis or as a rider for all of the common employer's policies, including directors and officers, employers liability, and comprehensive general liability. In general, these policies offer broad coverage of the sorts of claims now usual in wrongful termination or employment discrimination cases. The policy is written on a claims-made basis with defense costs within its limits. Coverage is triggered by a lawsuit, an administrative proceeding, or a written claim of discrimination, sexual harassment, or wrongful termination. There are often exclusions for punitive damages, contract claims, company downsizing or plant closures, and intentional acts.

Likely EPL coverage issues: Given the growth of EPL coverage in recent years, the paucity of reported decisions is surprising. In spite of this continued lack of guidance from the courts, interpreting these forms should not pose a formidable task for experienced coverage counsel. Because similar language has long been used for various types of errors and omissions insurance, EPL coverage case law will almost certainly follow the general lines of interpretation already laid down for these similar forms.

One EPL coverage problem that may arise concerns the insurability of intentional acts. Ordinarily, discrimination is an intentional act. In general, liability insurance does not apply to what is expected or intended from the point of view of the insured. However, there is widespread agreement that, if the named insured is held vicariously liable for an employee's wrongful acts, coverage exists for the named insured but not for the wrongdoing employee. An employee claim against a corporate employer usually succeeds because the corporation is held strictly liable for discrimination by a supervisor or is found liable for negligent failure to prevent harassment. Hence the intentional acts problem is unlikely to prevent coverage for the typical business which purchases an EPL policy.

EPL coverage is written on a claims-made basis. A much more significant coverage problem is likely to be encountered in seeking the answer to the question, what is a claim? Most of us would say that a claim is a written, or perhaps even oral, demand for money damages. However, to the extent that a reader thinks that only this type of claim can trigger coverage under a typical EPL policy, he or she would be sadly mistaken. Most policies, either in their definition of a claim or elsewhere, treat circumstances that make the insured aware of a possible future claim as if they were claims made during the policy period. This is true even if the eventual claim is not made until after the claims-made policy has expired. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

The Growing Significance of Employment Practices Liability Insurance
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.