Insurance Insights

Coverage Insights

Why Employment Practices Liability Insurance Makes Sense for Small Business

If you run a small business, you may be surprised to learn that the average cost of an employment-related lawsuit exceeds $270,000. More surprising is a recent study that revealed over half of all claims filed for employment-related liabilities are against employers with fewer than 50 employees. The same study also indicated that not even 2 percent of small businesses have employment practices liability (EPL) coverage.

With a slow economy and increasing adoption of worker-friendly laws, employment-related cases are on the rise. According to data from the Equal Employment Opportunity Commission, most claims are based on race, sex, age and disability. Given the high price tag, many small businesses cannot afford to pay for lawsuits of this nature—and keep their company afloat.

What Puts Small Businesses at Risk?

Understandably, it can be much more difficult for small businesses to defend themselves against employment-related claims because they tend to have fewer resources and a different work environment. Small businesses are particularly at risk for employment-related claims for the following reasons:

  • Minimal staff and lack of in-house counsel and/or a full human resources department to rely on
  • Overall lack of extensive recordkeeping on employee performance
  • More intimate working environments may cause personal riffs during layoffs

An Affordable Solution

Fortunately, a growing number of insurers are tailoring ELP policies specifically to the needs of individual companies. Additionally, comprehensive ELP coverage is becoming more affordable to help protect small businesses in these tough times.

Talk to VTC Insurance Group to learn if this risk transfer option is right for your business. To contact a VTC agent near you, give us a call, or visit vtcins.com.

The above content is for informational purposes only and is not intended as legal advice.


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