Employment Practices Liability Insurance: Third in a Four Part Series

The following features are some of the highlights and components employers should look for:

• A broad definition of “employment practice” acts to ensure a broad range of coverage;
• Coverage in wage and hour litigation to the extent possible;
• Defense costs for breach of contract claims;
• Third party coverage (such as for supervisors in sexual harassment cases);
• No exclusion for mental anguish or emotional distress;
• Coverage for leased employees as insured, excess of indemnification and other insurance;
• A clear definition of retaliation and carve-back (exemption) on exclusions. A carve back removes an act or occurrence from an exclusion in the policy. Employers will want retaliation claims covered in light of how commonly they arise;
• The ability to dictate the Company’s choice of counsel. See our next article in the series for why it is important to choose your counsel to defend your business;
• Low retention amounts to limit initial cost exposure;
• Defense costs in addition to liability limits for eligible insureds;
• Bilateral discovery tails for one, two and three year terms;
• Loss control assistance;
• Defense costs for non-monetary relief;
• “Most favorable venue” clauses on punitive damages. These clauses provide that the law of the jurisdiction most favorable to the insurability of punitive damages shall control, provided such jurisdiction Is where such punitive damages were awarded or imposed, is where the parent corporation or any subsidiary is incorporated or otherwise organized or has a place of business, or is where the underwriter is incorporated or has its principal place of business
• Desired complementary coverage for Directors and Officers, Fiduciary liability coverage, Employed Lawyers Liability Coverage, and Commercial Crime Coverage.

COUNSEL TO MANAGEMENT: A wide variety of coverage is available for employers. Employers should explore the policy very carefully, and select coverage components that are important to them, and protect them from any vulnerabilities based upon the nature of their business or industry. Particular issues are of concern to employers who lease employees, and staffing agencies that provide them. Other industries, such as agriculture and construction can have unique legal issues that require the expertise of specialized counsel.

Next in the series: Who should employers select as counsel?

The goal of this article is to provide employers with current labor and employment law information. The contents should not be interpreted or construed as legal advice or opinion. For individual responses to questions or concerns regarding any given situation, the reader should consult with Saqui & Raimondo at (831) 443-7100 in Salinas, or (916) 782-8555 in Sacramento.