Owning a rental property can help you generate extra cash flow. If you aren’t properly protected, though, your finances – and your future – could be at risk. That’s where employment practices liability (EPL) coverage comes in. EPL can help safeguard your finances and limit the risk your rental property business is exposed to.

To help determine whether EPL coverage should be part of your business insurance package, learn what it is, what it covers, and why it can be valuable for your business.

What is Employment Practices Liability (EPL)?

EPL helps protect your finances in the event an employee sues you for discriminatory, illegal, or unfair work practices. Some common reasons employees may file a suit against a small business include allegations of wrongful termination, sexual harassment, and breach of employment contract.

Employees might not be the only ones who file claims against your rental property business, either. Residents – potential and current – and vendors may also file related claims against your business. Millers Mutual offers EPL insurance for third-party claims, so you’re protected if a customer or vendor files an EPL-covered claim against you.

An EPL policy should help cover expenses related to the lawsuit, including judgments or settlements, whether you win or lose the case. EPL coverage can be included in your business insurance package, available as an endorsement or rider, or purchased as a standalone policy.

What does Employment Practices Liability Cover? 

EPL insurance can provide financial protection when your business is faced with one or more of the following claims:

• Discrimination based on age, race, gender, and other legally protected categories
• Sexual harassment
• Wrongful discipline, demotion, or termination (including when an employee resigns because of a hostile environment or unfair work practices)
• Breach of employment contract
• Defamation
• Infliction of emotional or mental distress
• Privacy violations
• Mishandling of employee benefits
• Deprivation of career opportunities, including failure to promote and wrongful evaluations
• Violation of laws such as the Family Medical Leave Act

So, what does EPL not cover?

EPL insurance won’t cover claims that could be covered by other insurance policies. For instance, privacy violations caused by a technology breach wouldn’t be covered by EPL because they can be covered by data response and cyber liability insurance.

Violations of certain laws, like the National Labor Relations Act and the Occupational Safety and Health Act (OSHA), are also usually not covered by EPL insurance. An EPL policy may also not cover punitive damages or fines.

Why Do You Need It?

Discrimination, harassment, and other claims aren’t just made against large businesses and corporations. Small businesses have a real risk of facing claims of discriminatory, illegal, or unfair practices, even if the claims are baseless or the business is well-managed. New rental property owners, especially, may not think of their operations as a “big” business and may be less aware of the employment laws that apply to them. What’s more, most rental property businesses lack the internal resources and staff to adequately mitigate and reduce employment risk exposures.

Lawsuits can cost massive amounts of time and money, and they sometimes span years before they’re resolved. Even baseless charges require you to appear in court and go through legal motions to achieve a resolution. Getting a lawyer, handling court costs and fees, acquiring and filing needed documents, and missing work can all eat into your finances.

Say one of your former maintenance workers claimed they were wrongfully terminated because of their health. They file suit against you, so you hire a local law firm to defend you. The case takes roughly a year to be completed, with multiple court appearances and document filings required in that time. By the end of it, your total legal bills amount to $50,000. If you didn’t have EPL coverage, you would have to pay every cent of that out of your own pocket and face crippling your finances.

EPL insurance can be an essential part of your rental property business insurance package. Even if you rarely use it, the protection and peace of mind it can provide make it well worth the cost. At Millers Mutual, we provide EPL insurance policies up to $1,000,000, with resources and educational materials to help you minimize your risk.

In Closing

Protect your financial future by getting the right coverage for your needs. Think employment practices liability coverage may benefit your rental property business? Contact Millers Mutual to learn how we rise to meet your needs and protect your future.