Most business owners are prepared for the obvious risks such as property damage, theft, or liability claims from a customer injury. Far fewer are prepared for the risks that come from inside their own organization.
A recent viral incident at a Coldplay concert involving senior executives from a tech company created immediate disruption and public scrutiny. Whether or not lawsuits follow, it is a reminder that employment-related issues can arise suddenly, carry significant reputational and financial consequences, and affect organizations of any size.
It is easy for small business owners to think employment-related claims are a “big company” problem. The reality is quite different. According to EEOC data, the majority of these claims are filed against businesses with fewer than 100 employees. These companies often have limited HR support, informal policies, and minimal documentation, all of which increase vulnerability when a dispute arises. Employment Practices Liability Insurance (EPLI) can be appropriate for nearly any employer, from a business with only one or two employees to large organizations, because the exposure exists as soon as someone is hired.
Even unfounded claims can be expensive. The legal defense alone can be disruptive, and reputational harm can linger long after the matter is resolved. EPLI helps cover the cost of defending and resolving a wide range of allegations, including discrimination, harassment, wrongful termination, retaliation, and failure to hire or promote fairly. Coverage typically includes legal defense costs, settlements, and judgments, up to the policy limits.
While EPLI addresses employment-related disputes, other coverages may also be important in situations involving executives. Directors and Officers (D&O) insurance protects leadership and the company against claims alleging wrongful acts in managing the business, often brought by shareholders or regulators. Fiduciary liability covers claims related to mismanagement of employee benefit plans. Together with EPLI, these coverages provide more complete protection for leadership and the organization.
Many small business clients do not realize they have this gap in coverage. Some believe their general liability policy would respond to these types of claims. In reality, it does not, and most policies specifically exclude them. Others assume they are too small to be at risk. Agents who introduce EPLI as part of a broader risk conversation can help clients understand their exposure, see the value of protection, and view the agency as a trusted advisor.
EPLI also creates an opportunity to discuss risk management practices. This can include encouraging the development of employee handbooks, anti-harassment training, consistent documentation of performance issues, and clear hiring procedures. Carriers often provide HR and risk control resources that agents can connect their clients to, adding value beyond the policy itself.
Bringing EPLI into the conversation is not just about selling an additional policy. It is about helping clients safeguard their business from a category of risk that is often underestimated but potentially devastating. By making it part of your regular commercial account reviews and explaining how it complements other executive protections like D&O, you help clients protect their finances, their reputation, and their ability to focus on running their business.