Professional Jeweler Archive: Basics of Employment Practices Insurance

June 2001

Managing/Legal Issues

Basics of Employment Practices Insurance

More workers are suing employers for discrimination, sexual harassment or breach of contract. Jewelers Mutual can help

The Equal Employment Opportunities Commission filed a lawsuit against Zale Corp. in March alleging sexual harassment of female employees at a single store in New York state. The store manager allegedly touched and grabbed the employees repeatedly.

This lawsuit is a striking reminder of the importance to your business of Employment Practices Liability Insurance. Jewelers Mutual Insurance Co., Neenah, WI, recently formed a partnership with Shand Monahan & Co. to offer retail jewelers this kind of insurance. Such coverage – traditionally excluded from jewelers block, general comprehensive liability and umbrella insurance policies – covers most claims made against you or your company as an employer.

EPLI protects you against claims in three general areas:

  • Discrimination. These primarily allege wrongful termination or failure to hire or promote a member of a class protected under federal law. Women, minorities and the disabled are protected classes. It’s illegal to discriminate on the basis of gender, race, religion and, in some states and cities, sexual orientation.
  • Sexual harassment. These are a kind of discrimination claim, but they usually arise out of conduct of a sexual nature or what is known as a hostile environment.
  • Breach-of-contract. These claims may involve misrepresentation concerning job requirements or work to be performed or negligence in an employee’s evaluation that leads to termination or loss of a promotion or job benefit.

Failure to have EPLI coverage could be ruinously expensive. Legal fees to defend an employment practices lawsuit average $44,000 and can easily exceed $100,000. And that’s just legal fees. The median jury award is $106,000 in sex discrimination cases, $219,000 in age discrimination cases and $147,000 in race discrimination cases. These figures were obtained from Jury Verdict Research, a publication that monitors jury verdicts.

EPLI Coverage

EPLI has been around for more than a decade and is offered by a dozen or more companies across the country. But it hasn’t been available in all geographic regions and was often prohibitively expensive. Now Jewelers Mutual’s EPLI coverage is available in all 50 states, covers defense costs and damages and is competitively priced, says Darin Kath, vice president of underwriting at JMI.

The company offers a variety of policy limits and deductibles. The higher the policy limit, the higher the cost and the more the company may be obligated to pay to defend you or to pay for a settlement or judgment. The deductible is the amount you pay before your insurer pays anything.

The higher the deductible, the lower the premium. Premiums are affected also by the number of employees and your company’s location. Your insurance agent can help you decide the best policy limits and deductible for you.

Services to Policyholders

As part of its partnership with Jewelers Mutual, Shand Monahan offers free loss-prevention services to EPLI policyholders. These include seminars, a telephone hotline and a loss-control manual.

The first line of defense against such lawsuits is strong awareness of what the law requires and a commitment to prevent problems or deal with them before they become lawsuits.

The second line of defense is insurance coverage appropriate to your business.

• Jewelers Mutual, Neenah, WI; (800) 558 6411;

– William H. Donahue Jr.

William H. Donahue Jr. is an attorney practicing in New Jersey.

Jewelers’ Legal References

Search our online archives at for the following articles and related news:

  • For a fuller discussion of EPLI, see Professional Jeweler, February 1998 and March 1998 (search for EPLI).
  • For a discussion of legal requirements under the Americans with Disabilities Act, see Professional Jeweler, August 1999 (search for ADA).
  • For a full discussion of the different kinds of sexual harassment, see Professional Jeweler, April 1998 (search for sexual harassment).

Copyright © 2001 by Bond Communications