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EPLI Coverage: If You Like Us, Let Them Know
Over the last ten years or so, Employment Practice Liability Insurance (“EPLI”) has become a more and more common form of insurance coverage for businesses. Unlike traditional sources of coverage, which insure against risks associated with business operations, products, work injuries, hazards, etc., EPLI covers an employer against liability stemming from employment practices, such as damages (e.g., back pay, front pay, compensatory damages, attorney fees, etc.) for unlawful discrimination, wrongful discharge, whistleblowing, etc.
Most EPLI policies include a deductible or retention level of several thousand dollars, which the employer must pay from its own coffers before any amounts are paid under the policy. The retention covers not only damages, but also any attorney fees incurred in defending the claim. For example, if the policy has a $10,000 retention limit, the first $10,000 paid on a claim comes out of the employer’s pocket.
EPLI policies also commonly contain a reservation of counsel clause, under which the carrier reserves the right to assign the attorney who will represent you in the matter. This means that if you have been working with your existing counsel for years and have developed a good, trusted relationship, your attorney may not be able to represent you when it matters most – like when you are being sued! Instead, you will be assigned the panel counsel selected by the insurance carrier.
What employers do not realize is that they can have a say in the matter. Many carriers offer a “choice of counsel” option, under which the employer is afforded the ability to select counsel in a matter. Other carriers may allow discussion of counsel in connection with renewal, agreeing upon the use of specified counsel in defense of matters under the policy. What is most important is that you address this issue before you enter into a policy or upon renewal.
The lesson: If you like your attorneys and the quality representation that they have been providing (including those of us here at Wessels Sherman), then it is important that you reserve your right to continue that representation when it matters most – during the heat of litigation. Talk to your broker or your carrier, and, as always, if you have additional questions, feel free to call your trusted counsel at Wessels Sherman.
Questions? Please contact Wessels Sherman Attorney Alan E. Seneczko at (262) 560-9696, or email firstname.lastname@example.org .
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