Employment practices liability insurance, or EPLI, applies to businesses of all sizes. However, club owners may have declined this option in the past because it wasn’t clear how EPLI provides vital protection and value for a small business.
EPLI provides a limit of insurance that’s separate from your standard commercial general liability policy. It protects your club’s operations from exposures arising from alleged errors, acts or omissions — among other things defined within your policy — that result from your employees or employment-related activities. These acts include personnel and staffing matters, such as hiring and firing decisions, or allegations of discrimination in the workplace.
Here are four common misconceptions about EPLI, along with additional information to consider when reevaluating your club’s insurance program:
1. EPLI is not right for our club because it’s only for large organizations. Just because your fitness facility is small, that doesn’t mean it is immune to charges of unlawful employment practices. The differences between large and small organizations are expectations — larger organizations tend to recognize the risk and their need for protection. Those businesses often have legal counsel advising them about the importance of EPLI coverage. On the other hand, smaller organizations generally have a familial culture where being sued seems unlikely and that is not necessarily the case.
2. My club can’t afford EPLI coverage. Smaller organizations may think the coverage is expensive and out of reach. However, in today’s world, no business can afford to go without it. EPLI claims can easily cost tens of thousands of dollars or more, and that doesn’t include legal defense costs.
3. The application process is difficult, and we don’t have the documentation to secure coverage. Your local, independent agent can help your small business apply for EPLI coverage or add it to your existing commercial general liability policy.
4. EPLI coverage is advantageous for only certain types of businesses. This is a common misconception. A variety of health and fitness businesses can benefit from EPLI coverage, including:
- Health clubs of all sizes
- Sports facilities
- Yoga, Pilates, spinning and barre facilities
- Aerobics, gymnastics and dance studios
- Tennis and racquet clubs
- Personal training facilities
- Sports organizations, leagues and booster associations
Because circumstances can vary widely, it’s important to assess your situation, consult with your attorney and talk to an independent insurance agent who can tailor coverage to fit your club’s unique needs.
This loss control information is advisory only. The author assumes no responsibility for management or control of loss control activities. Not all exposures are identified in this article.
Jayson Scott has 14 years of experience as a commercial lines underwriter at The Cincinnati Insurance Company. Since 2014, he has supported Cincinnati’s growing Fitness, Sports & Recreation program, initially as the program’s dedicated specialist and now as national program director. For more information, contact Jay, Jayson_Scott@cinfin.com or 513-603-5885. Please visit www.cinfin.com/fitness-sports for more information.
