Four little letters – EPLI – cover a huge range of very serious issues. EPLI stands for employment practices liability insurance and deals with wrongful termination, discrimination, sexual harassment, and other workplace situations.

It’s one of the fastest-growing legal issues. In 2016 the Equal Employment Opportunity Commission (EEOC) helped U.S. employees receive $482 million in discrimination compensation alone. And, in the years since some major Supreme Court decisions and lawsuits are on the rise overall.

Here are five things you need to know about EPLI.

SEE ALSO: What is Cyber Liability and Data Breach Coverage?

1. It’s not just a big business issue.

Any business with at least one employee should be concerned about employment insurance. A small or family business owner might think, “We don’t need insurance. We’re a family here.” But huge employment issues can be triggered by the smallest of incidents. Imagine having to let someone go simply because it’s your slowest time of year. If they allege that the reason was discrimination, you’re facing a costly legal battle. Remember, you don’t have to be in the wrong to be sued.

2. Many lawsuits are over new definitions of discrimination.

The EEOC’s official statement of enforcement and litigation data explains that discrimination occurs in “both overt and subtle forms.” Subtle forms can be harder to detect or exist outside earlier definitions of discrimination. Most people are aware of discrimination based on race, sex, age, religion, and national origin. Claims are increasing in newer areas like equal pay, gender affiliation, retaliation, disability, and genetic information.

3. Courts are expanding who can sue.

A 2011 Supreme Court decision widened the definition of who can sue for employment discrimination, ruling that a former employee could sue for retaliation against his fiancee. This came on the heels of a 2006 decision that included “adverse action” as prohibited employer behavior. This means an employee can sue for discrimination not just after being fired or demoted, but for more nuanced things like being denied the most profitable clients.

4. The average lawsuit costs $235,000.

Even in cases where the lawsuit is unfounded, it can be extremely expensive to deal with. Small and mid-size businesses might not be able to survive the financial hit. The EEOC found that the average cost of fighting a discrimination case was $235,000 during a year that saw the largest number of cases in the agency’s history.

5. Your policies affect your insurance premiums.

When you contact an insurance agent about EPLI, they’ll run a risk analysis and take some basic factors into account: type of business, geographic area, employee count, industry. But did you know your own employment policies are also a contributor to your overall cost? If your policies are lax, that creates risk. Risky businesses are more expensive to insure. Make sure you have an employee handbook, ethics code, anti-retaliation policy, and ongoing training on workplace policies.

SEE ALSO: 7 Signs Your Business Insurance Coverage is Lacking

It’s all a lot to think about. That’s why EPLI coverage can bring such peace of mind. Your insurance company can not only cover you if there’s a lawsuit, but also guide you toward company policies that will help prevent legal action in the first place. Click here to get a free quote. 

1. You haven’t made it a priority as a small business

Small business owners sometimes figure they don’t need to carry much insurance because they don’t have a lot of assets. But someone who sues you doesn’t necessarily care how much money you have. They may, unfortunately, intend to destroy you financially. And the smaller a business is, the more likely it is that an owner or manager can be held personally liable. So in a way, small businesses are at a much higher risk than big enterprises, because one lawsuit can be devastating.

Never been sued? You’re lucky. The Small Business Administration estimates that 36 to 53 percent of all businesses will be involved in litigation in any given year. For many of those, a business insurance policy will cover the costs of settlements, judgments, and legal fees. Unfortunately, some companies will discover their coverage is lacking. Here are some indicators that your business may be underinsured..

2. You’re in the business of advice

Anyone who gives advice for a living is at risk of misunderstandings, client dissatisfaction, and simple human error. Advice-giving professions are not limited to fields like counseling and financial planning. Here’s just a short list of professions that also give advice: tax preparers, home inspectors, building contractors, wedding planners, professional organizers, life coaches, sales trainers, and motivational speakers.

3. You have employee turnover

Even your most trusted employee can make a mistake that costs your company thousands of dollars. So if you have high turnover, there’s even more exposure to risk. A government study of small business lawsuits found that after a suit, business owners primarily wished they had trusted their employees less, purchased insurance, and made sure every employee was bonded.

4. You only have one kind of insurance

There are many types of business insurance. General liability and business owner’s policies (BOPs) are some of the most basic, but if that’s all you have, it can be a sign that you are not fully insured. Review other types of insurance, like: property, commercial auto, worker’s compensation, errors and omissions (E&O), directors’ and officers’ (D&O), cyber liability, employment practices, business interruption, and umbrella policies which supplement existing policies against catastrophic loss.

5.  It’s a high-risk business

It might not feel like your business falls into the typical high-risk categories, like doctors, lawyers, online gambling, and adult-oriented services. But there are dozens of other fields that come with high risk. Software developers, for example, can accidentally cause millions of dollars in lost revenue due to glitches. Sometimes there is risk simply because the business deals with highly emotional situations, as funeral directors do. Your insurance company can do a risk assessment that clarifies your situation and highlights areas that might need coverage.

6. You haven’t reviewed your policy lately

If you’ve been renewing the same policy for years, and can’t recall exactly what it covers, it’s time to take a fresh look. Tech issues have created new risks. For example, if  your employees handle credit card information, or deal with a large amount of customer data, it might be time to look into cyber liability and data breach coverage.

7. You’ve never been sued or made a claim

Although it’s counterintuitive, if you’ve never been sued or made an insurance claim, it might be an indicator that you’re underinsured. Why? Because lawsuits and disasters force companies to review and update insurance policies. One study found that 94 percent of business owners assumed they were fully covered in the event of a disaster, but just 56 percent actually were.

SEE ALSO: Why Do I Need Errors and Omissions Insurance Coverage? 

Click here to get an insurance quote and ensure your business is fully covered.

Reprinted with permission from Links Insurance