Property and Casualty Insurance Practice Exam

What type of policy protects employers from wrongful termination and discrimination claims?

1. Workers' Compensation Insurance

2. General Liability Insurance

3. Employment Practices Liability (EPL) Insurance

4. Fidelity Bond Insurance

The correct answer is: Employment Practices Liability (EPL) Insurance

Employment Practices Liability (EPL) Insurance is designed specifically to protect employers from claims related to wrongful termination, discrimination, sexual harassment, and other employment-related issues. This type of policy covers the legal costs and damages resulting from claims made by employees, former employees, or potential employees. EPL insurance is particularly important as it addresses the risks that can arise from employer-employee relationships. With the increasing awareness of employee rights and the growing number of lawsuits in this area, having this coverage helps employers mitigate potential financial losses associated with defending against such claims. In contrast, Workers' Compensation Insurance primarily covers employees injured during work but does not address wrongful termination or discrimination claims. General Liability Insurance protects businesses against third-party bodily injury and property damage claims, which is separate from employment-related issues. Fidelity Bond Insurance safeguards businesses against employee dishonesty or theft but does not cover claims regarding employment practices. Therefore, EPL Insurance is the appropriate choice for protecting against wrongful termination and discrimination claims.