3 min read
EPLI vs Workers Comp: What's the Difference? (2026)
If your business has employees, two of the most important coverages you can carry are EPLI and workers compensation....
EMPLOYMENT PRACTICES LIABILITY (EPLI)
Protect your business from employee lawsuits
One discrimination, harassment, or wrongful termination claim can cost six figures to defend, and your general liability policy will not respond. EPLI covers the legal bill, placed by independent Illinois brokers who shop A-rated carriers for you.
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- Employment Practices Liability Insurance (EPLI)
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Quick Answer: EPLI (employment practices liability insurance) pays legal defense costs, settlements, and judgments when an employee, former employee, or job applicant sues your business over wrongful termination, discrimination, harassment, or retaliation. Most small businesses pay roughly 1,000 to 3,000 dollars per year, and defense coverage applies even when the claim is groundless.
Video transcript
You can do everything right as an employer and still get sued by an employee. And here's the part that catches business owners off guard: your general liability policy won't cover a dime of it. That gap is exactly what EPLI fills. EPLI, employment practices liability insurance, generally pays your legal defense, settlements, and judgments when an employee, a former employee, or even a job applicant sues your business over wrongful termination, discrimination, harassment, or retaliation. Here's the misconception that costs owners the most: general liability and a standard business owner's policy typically exclude employment claims. So when an employee lawsuit lands, the policy you assumed would respond simply doesn't. What does EPLI cover? Wrongful termination. Discrimination based on a protected class. Harassment, including a hostile work environment. Retaliation, the most common charge filed nationally. And failure to hire or promote, including claims from applicants who never worked for you. Who needs it? Really, any business with employees. Most of these claims are filed against companies with fewer than a hundred people, and even a groundless suit commonly costs tens of thousands of dollars to defend. In 2024 alone, the EEOC received over 88,000 discrimination charges. At Pro Insurance Group, we place EPLI, often as part of a broader management liability program, by shopping multiple A-rated carriers for the right fit and price. Not sure whether your business is exposed? Get a free EPLI review from Pro Insurance Group. The link is right below.
What EPLI covers
Wrongful termination
Defends claims that an employee was fired in violation of law or contract.
Discrimination
Covers allegations based on age, race, sex, disability, religion, or other protected classes.
Harassment
Including sexual harassment and a hostile work environment, brought by staff or applicants.
Retaliation
The most common charge filed nationally. Covers claims of punishment for protected activity.
Failure to promote or hire
Defends claims tied to hiring and advancement decisions, including from applicants.
Defamation & emotional distress
Related workplace allegations that often accompany an employment lawsuit.
Why every employer needs it
Employment lawsuits are common, rising, and expensive, even when the claim is groundless. In fiscal year 2024 the U.S. Equal Employment Opportunity Commission received 88,531 discrimination charges and recovered nearly 700 million dollars for workers. Most claims are filed against businesses with fewer than 100 employees, and a common misconception is that general liability insurance would respond. It will not. General liability excludes employment claims, which is exactly the gap EPLI fills.
EPLI is one piece of the employee-related liability picture. Lawsuits over physical workplace injuries belong to employers liability coverage, Part Two of your workers compensation policy, while claims over mismanaged benefits fall to employee benefits liability. Claims against your leadership personally are the territory of directors and officers insurance, which is frequently packaged with EPLI in a management liability program.
What EPLI costs
Employment practices liability insurance cost is driven mainly by your employee count, industry, and claims history. Here is the typical EPLI insurance cost range by business size:
| Business profile | Typical annual premium |
|---|---|
| Under 10 employees | $1,000 to $1,500 |
| 10 to 50 employees | $2,500 to $4,500 |
| Larger or higher-risk industries | $5,000+ |
The national small-business average is about 2,665 dollars per year. Put that against the cost of a claim: defending a single employment lawsuit commonly runs 50,000 to 100,000 dollars or more, even when you win. As independent brokers, we shop multiple A-rated carriers and access wholesale markets to match your coverage and price.
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Frequently asked questions
What does EPLI cover?
EPLI covers legal defense costs, settlements, and judgments when an employee, former employee, or job applicant sues your business over an employment-related wrongful act. Covered claims typically include wrongful termination, discrimination, harassment, retaliation, failure to promote, and wrongful discipline. Defense costs apply even when the claim is groundless.
What does EPLI not cover?
EPLI excludes bodily injury claims, which belong to workers compensation and employers liability, and it does not cover criminal conduct or intentional dishonest acts. Wage and hour disputes such as unpaid overtime are commonly excluded or limited to a small sublimit, and punitive damages are uninsurable in some states. Reading the exclusions matters as much as reading the coverage.
Do small businesses need EPLI?
Yes, often more than large companies. Most employment claims are filed against businesses with fewer than 100 employees, which usually lack in-house HR and legal teams, and defending a single claim commonly costs 50,000 to 100,000 dollars or more even when the employer wins. One claim can erase years of profit.
How much does EPLI cost?
Most small businesses pay roughly 1,000 to 3,000 dollars per year, with a national average around 2,665 dollars. Premiums rise with employee count, industry risk, claims history, and the limits you choose. Strong HR practices, an employee handbook, and documented hiring and termination procedures often earn better pricing.
Is EPLI included in general liability or a BOP?
No. General liability policies specifically exclude employment-related claims. Some business owners policies offer an EPLI endorsement, but those versions usually carry low sublimits and narrow terms. A standalone policy or a robust endorsement with adequate limits is the reliable way to cover employment lawsuits.
Does EPLI cover claims from people who are not employees?
It can. Third-party EPLI coverage, available as an endorsement on most policies, covers discrimination or harassment claims brought by non-employees such as customers, vendors, or clients. Businesses with heavy public contact like retail, hospitality, and healthcare should confirm this endorsement is included.
Protect your business before a claim hits
Get an independent EPLI quote from a licensed advisor. No pressure, no call-center runaround.
Get My EPLI Quote Call 833-776-4671NF
Reviewed by Neal Fusco, VP Commercial Lines
25+ years specializing in commercial and management liability risk across Illinois and 40+ states.
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