A Lawsuit That Doesn't Come From a Customer
Picture a lawsuit against your business, and it probably involves a customer who slipped in the parking lot or a vendor dispute gone sideways. Those are real risks. They're exactly what general liability is built for.
But what about the claims that come from inside the building, not outside of it?
A wrongful termination complaint. A harassment allegation. A retaliation claim from an employee who was let go the same week they filed a complaint. These do not come from a customer or a competitor. They come from the people on your own payroll, and they are some of the most expensive claims a business can face.
Employment practices liability, explained
Employment practices liability (EPLI) coverage responds to claims tied to the employment relationship itself: wrongful termination, discrimination, harassment, and retaliation. It is usually its own policy, not an add-on, because general liability covers third-party injury and property damage, not disputes between an employer and an employee.
Most businesses with employees carry some version of this exposure, regardless of industry or size. A single hiring decision, performance review, or termination can turn into a claim, even when the business did everything right.
Why defense costs change the math
Here's the detail that catches many business owners off guard: on most EPLI forms, defense costs can be paid from the same limit that covers the claim. A policy that looks like plenty of coverage on paper can shrink fast once legal bills start piling up, well before any settlement or judgment.
That's why your limits deserve a periodic look, not a number picked once and forgotten.
When was the last time your handbook got a real look?
Employee handbooks, hiring practices, and termination procedures tend to get written once and left alone for years. But employment laws shift, teams grow, and the practices that made sense at five employees may not hold up at twenty-five. Reviewing your handbook alongside your coverage is one of the more overlooked parts of running a business with people on staff.
The bottom line
Not every risk to your business comes from outside your walls. The employment relationship carries its own exposure and deserves its own conversation, separate from the general liability policy already in place for everything else.
If it has been a while since we reviewed your EPLI coverage, or you are not sure whether you have it at all, reach out, and let's take a look together.
This content is from sources believed to be accurate and is for general information only, not tax or legal advice. Consult appropriate professionals for your individual situation. Copyright FMG Suite.
