Standard Protections: Legal Defense Costs and Settlements

The backbone of any EPLI policy is coverage for legal defense costs, settlements, and court-awarded judgments. Most policies cover claims related to discrimination, harassment, retaliation, wrongful termination, failure to hire or promote, and employment-related defamation. EEOC data shows that 81% of employment claims settle for between $22,400 and $40,500, but outlier cases can easily exceed $1 million.

Defense costs are often included within the policy limit rather than paid in addition to it. This distinction matters enormously: if you carry a $500,000 limit and spend $200,000 on legal defense, you only have $300,000 left for a settlement. Ask your agent whether defense costs erode the limit or sit outside it. That single detail can determine whether your coverage actually protects you.

Third-Party Coverage for Interactions with Clients and Vendors

Standard EPLI policies cover claims from employees, but many businesses also need third-party EPLI coverage. This extends protection to claims of discrimination or harassment made by customers, vendors, or other non-employees who interact with your staff. A restaurant patron alleging discriminatory treatment, or a vendor claiming harassment during a site visit: these scenarios fall outside standard EPLI unless third-party coverage is added.

For New Hampshire businesses in hospitality, healthcare, retail, or any client-facing industry, this endorsement is worth the additional premium. It's typically added as a rider to the base policy and costs relatively little compared to the exposure it covers.

What EPLI Does Not Cover: Wage and Hour vs. Bodily Injury

EPLI has clear boundaries. It does not cover wage and hour claims, which are among the most common employment disputes in the country. If an employee sues over unpaid overtime or misclassification as an independent contractor, your EPLI policy won't respond. Some carriers offer separate wage and hour defense coverage, but it's limited and usually only covers defense costs, not settlements.

Implementing Robust Employee Handbooks and Procedures

An EPLI policy is not a substitute for good employment practices. Carriers expect you to maintain current employee handbooks, anti-harassment policies, and documented complaint procedures. A well-drafted handbook does two things: it reduces the likelihood of a claim, and it strengthens your defense if one is filed.

Your handbook should clearly outline anti-discrimination and anti-harassment policies, complaint reporting procedures, progressive discipline steps, and at-will employment language. Have every employee sign an acknowledgment form. Update the handbook annually to reflect changes in state and federal law, including recent additions like Pregnant Workers Fairness Act requirements. These aren't just legal formalities: they're your first line of defense.

Utilizing Insurer-Provided HR Resources and Training

Many EPLI carriers offer free or discounted HR resources as part of the policy. These can include employee hotlines, harassment prevention training modules, policy review services, and access to employment law attorneys for quick consultations. These resources are wildly underused: most policyholders don't even know they exist.

Take advantage of them. Annual harassment prevention training, for example, is both a best practice and a premium-reduction strategy. Some carriers will reduce your deductible or offer premium credits for completing their training programs. It's one of the few areas in insurance where the carrier actively helps you prevent claims rather than just paying for them after the fact.

Not all EPLI policies are created equal, and the cheapest option is rarely the best one. Look for a carrier with strong claims-handling experience in employment law, a panel of qualified defense attorneys in New Hampshire, and a track record of supporting policyholders through the entire claims process rather than pushing quick settlements.

Working with an independent agency that understands New Hampshire's specific employment law environment makes a real difference. At Avery Insurance Agency, our consultative approach means we review your existing HR practices, identify coverage gaps, and match you with a carrier whose policy terms actually fit your risk profile. We've been doing this for over 125 years, and the employment practices landscape has never been more complex than it is right now.

The right policy paired with strong internal practices gives you genuine protection: not just a piece of paper, but a strategy that lets you hire, manage, and grow your team with confidence.

Is EPLI required by law in New Hampshire? No. EPLI is not mandated by any state or federal law. However, given the frequency and cost of employment claims, it's strongly recommended for any business with employees.

Does my general liability policy cover employment claims? It does not. General liability covers bodily injury and property damage to third parties. Employment-related claims like discrimination, harassment, and wrongful termination require a separate EPLI policy.

How many employees do I need before EPLI makes sense? Even businesses with one employee face exposure. That said, the risk increases significantly once you reach six employees, which is the threshold for New Hampshire's anti-discrimination laws.

Can I add EPLI to my existing business owner's policy (BOP)? Some carriers offer EPLI as an endorsement to a BOP, though standalone policies typically provide broader coverage and higher limits. Talk to your agent about which structure fits your situation.

Does EPLI cover claims from job applicants? Yes. Most EPLI policies cover claims from applicants who allege discrimination in the hiring process, including failure to hire based on a protected characteristic.