Key Differences Between Professional Liability and Employment Practices Coverage

Raffi Kodikian

October 11, 2021

Raffi Kodikian On the Key Differences Between Professional Liability

Professional Liability Vs. Employment Practices Liability Coverages: Raffi Kodikian Explains the Difference

Professional liability and employment practices liability may sound similar when a business owner is determining what kind of coverage they want for the company.  It would be easy to confuse them, largely because they’re both designed to help protect the business on behalf of the owner. However, the two cover very different events. Kodikian is a broker in the industry and an expert in liability. He explains why employers should have both policies to really protect themselves.

What Does Professional Liability Cover?

Professional liability covers mistakes on the part of the business, including negligence and poor performance. For instance, let’s say a baker makes two wedding cakes for two weddings on the same day. When he arranges the drop-off though, he mixes up the cakes. If the groom was allergic to one of the ingredients in this ‘new’ cake, Kodikian explains that professional liability would cover expenses related to the error.

What Does Employment Practices Liability Insurance Coverage?

Employment Practices Liability Insurance Coverage (EPLI) covers accusations against the employers on behalf of the employee. This includes discrimination, retaliation, violation of the Family Medical Leave Act, and wrongful actions. For instance, let’s say an employer denies a raise to their employee because it’s not in the budget, but the employee believes they were denied the raise because they recently had a child and needed to take some time off. If the employee decided to sue for retaliation, Kodikian says that EPLI would cover the costs associated with this claim.

Raffi Kodikian: What To Know About Your Policies

The most important thing for an employer to know about their policies is when and where they’ll need them. No one is immune to making mistakes or being wrongfully accused by their employees. Kodikian says that it’s possible to limit the odds of this happening with air-tight quality checks and better hiring policies, but it’s not a substitute for having coverage in case an expensive lawsuit lands on an employer’s door.

One thing to keep in mind when considering coverage is the financial limits and the terms of the policy. If an employee sues for wrongful termination several years after they’re let go, will the employer be able to file a claim under the original policy they had at the time or the one they carry now? If the suit drags on for months, is there a limit to how much the policy will cover? Kodikian knows that policy conditions can get confusing, but answering these questions is the best way to prepare long before anything occurs.