What Is Employment Practices Liability Insurance Rated On?
• number of employees and compensation: the more employees you have, the greater the likelihood of one submitting an employment-related claim. Well-paid employees make claims for larger amounts since damages are often determined using salary as a starting point.
• industry: businesses in industries with relatively high claim frequency (venture capital and tech included) will have higher premiums
• state: certain jurisdictions are especially friendly to employees. An EPLI policy is much more expensive in California than in most other states for this reason.
• internal controls: does the company have an employee handbook and an “at will” employment statement? Is any training provided surrounding sexual harassment, discrimination or workplace conflict? Is there an open-door policy and an HR representative that employees can safely confide in?
• financials: a company that is struggling financially is more likely to engage in risky employment practices.
• and (as always) claims history: a history of litigation raises red flags.
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