By Irene Morrill, CPCU, CIC, ARM, CRM, LIA, CRIS, CPIW — VP of Technical Affairs, MAIA
Certainly over the last two decades, we have strongly recommended that our commercial lines clients purchase Employment-Related Practices Insurance (EPLI) coverage. According to the IIABA national website, employee lawsuits have increased 400% over the last 20 years, and wrongful termination suits jumped a whopping 260%. Over 40% of the lawsuits involve employers with under 100 employees, so its NOT just the Walmarts and Home Depots of the world that need insurance coverage. And whether they are found negligent or not — having insurance dollars to defend against such claims can be vitally important for small business owners.
EPLI Articles and Information
Some current articles identified the “trending” EPLI suits to be:
- Pregnancy discrimination,
- Illegal background checks,
- Unpaid interns, and
- Genetic discrimination.
Defense of these suits can run from $10,000 to over $200,000, depending on whether settled out of court or not. This is NOT including the damages awarded, if any.
But… identifying the importance of EPLI to protect employers from employee lawsuits is not why I am writing this article.
Rather, I am writing it to say that any business that interacts with “the public” needs to buy EPLI that includes Third-Party Discrimination coverage.
In the last couple months, I have received a few questions from members asking about “third-party” discrimination lawsuits. The agents were stunned that the Commercial General Liability (CGL) policy or BOP (Businessowners Policy) did not cover their customer’s lawsuits.
- One agent had a restaurant owner client who was sued for discrimination because the claimant felt there were barriers to his ability to eat at that restaurant and be able to sit at a table with his wheelchair.
- Another had a condominium client that was concerned if there would be coverage should the association be sued because the building was not ADA compliant.
- And the most recent situation questioned how lawsuits for ADA website compliance would be addressed.
Doesn’t the CGL/BOP cover these above situations?
No. Suits for discrimination are not encompassed in the definitions of bodily injury, property damage, or personal injury found in these policies.
"Bodily injury" [BI] means bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time.
"Property damage" [PD] means:
- Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or
- Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the "occurrence" that caused it.
For the purposes of this insurance, electronic data is not tangible property.
"Personal and advertising injury" [PI] means injury, including consequential "bodily injury," arising out of one or more of the following offenses:
- False arrest, detention or imprisonment;
- Malicious prosecution;
- The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor;
- Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services;
- Oral or written publication, in any manner, of material that violates a person's right of privacy;
- The use of another's advertising idea in your "advertisement"; or
- Infringing upon another's copyright, trade dress or slogan in your "advertisement".
BI, PD and PI as found in the BOP and CGL do not apply to a lawsuit from a claimant suing for discrimination due to their inability to gain access to a building; enjoy the ambiance and surroundings of restaurant dining; or access the business’s website.
The only policy that responds to discrimination suits is EPLI.
EPLI was created to address employment-related suits such as discrimination, wrongful termination, harassment, or inappropriate workplace conduct.
Importance of EPLI coverage for third-party suits
Over the last decade, the need for third-party coverage in the EPLI policy became evident due to high-profile discrimination suits such as Denny’s and Victoria’s Secret. Most EPLI policies include third-party liability coverage in the definition of “wrongful employment act” and EPLI SHOULD have its own insuring agreement and limit — if not automatically part of the EPLI, then an endorsement option for third-party coverage should be available.
So, even if business owners or executives don’t think they need EPLI to cover potential employee- or employment-related situations, any interaction with the public makes EPLI with third-party coverage VITAL.
Suits for lack of ADA website compliance was a new one for me!
I have known that ADA laws were created to prohibit discrimination against individuals with disabilities, but I never thought about website design as being discriminatory. The ADA regulations under Title III addressed 12 types of public accommodation for those with disabilities. In today’s world, the internet and virtual access is so much a part of everyday living that the current legal trend is that websites must be accessible to all.
The internet has added a whole new “flavor” to third-party EPLI claims. One article cited that in 2018 there were 630 website accessibility lawsuits in New York, and the defendants were hotels, restaurants, wineries and retailers. In other words, “regular clients.” Various articles note that these types of discrimination claims have increased over 30% in the last year!
Massachusetts is Number 4 in the number of website accessibility lawsuits.
I asked a credible source about website accessibility lawsuits
I asked a friend of mine for information on ADA compliance lawsuits. I was told:
This exposure has been around for the past decade or so, and you can find lots of material on it if you'll do a search for “Website Content Accessibility Guidelines.” Basically, individuals with certain physical handicaps have been successful in getting various entities to settle allegations that generally deal with inability to access, or properly access, websites, due to lack of the website's concern for their disabilities.
Initially, several airlines settled claims alleging that persons with certain handicaps were unable to utilize airport kiosks. More recently, an individual in South Florida was successful in his claim that, because he was legally blind, he couldn't properly utilize a grocery store's website (Winn Dixie). There have been others, but these are the key ones.
My friend sent me an article “Is your website ADA compliant” by Beecher Carlson, which you can access HERE:
BEWARE of exclusions
I was told to make sure that there is NO “Internet or cyber exclusion” on the EPLI policy. (My friend is ALSO very knowledgeable about “cyber coverage.”) If the EPLI carrier has an internet or cyber exclusion, find another EPLI carrier, as it is “unrealistic” to expect a CYBER policy to address a discrimination claim. This “ADA website compliance” lawsuit needs an EPLI policy with third-party coverage to address it, not a cyber policy.
So, armed with this information….
First, is YOUR website ADA compliant, as YOU are “accessible” to “the public” ????
Second, this is one more sales reason to present to your client when discussing the importance of EPLI. At the very least, be a “hero” and suggest that they make sure that their website is, in fact, ADA website compliant.
Third, even if you or your clients think you are “compliant,” you could still get sued. In MA a claim can be brought by MCAD (Massachusetts Commission Against Discrimination). It costs MONEY to defend oneself, even when one wins. EPLI third-party coverage will provide defense dollars. I believe that having defense coverage could be the difference between business solvency or not.
Don’t you just LOVE INSURANCE?
I have been in the industry since 1975. I know, that’s longer than some of you have been on the earth! There’s always something new and exciting to discuss with a client.
Please remember that part of MAIA service is answering questions and providing information. Please feel free to email me when you have a coverage question, problem or issue. Perhaps I can help – at email@example.com
This article has been developed expressly for the members of MAIA.
Reprint by other than members without the express permission of the author is not permitted.