Employment Practices Liability Insurance (EPLI): Do Small Businesses Really Need It?

Running a small business comes with plenty of challenges—keeping customers happy, balancing cash flow, and managing day-to-day operations. But one risk many small business owners overlook is the possibility of an employee lawsuit. In fact, according to the EEOC, thousands of employment-related claims are filed each year, and defending even one can cost tens of thousands of dollars.

That’s where Employment Practices Liability Insurance (EPLI) comes in. But here’s the big question: Do small businesses really need EPLI, or is it just a safety net for larger corporations?

Let’s break it down.

What Is Employment Practices Liability Insurance (EPLI)?

EPLI is a type of business insurance that protects companies when employees bring claims related to workplace practices. It’s designed to cover the cost of legal defense, settlements, and judgments when an employee accuses your business of wrongdoing.

Common claims covered by EPLI include:

• Wrongful termination

• Sexual harassment

• Discrimination (age, gender, disability, race, etc.)

• Retaliation

• Failure to promote or hire

• Misclassification of employees

• Workplace defamation

Without EPLI, these claims often fall outside the scope of General Liability Insurance—leaving business owners to pay out of pocket.

Why Small Businesses Are at Risk Too

It’s a common misconception that EPLI is only necessary for big corporations with hundreds of employees. The truth? Small businesses can be even more vulnerable.

Here’s why:

• Small businesses may not have a dedicated HR team, making them more prone to unintentional compliance mistakes.

• Even one employee dispute can drain financial resources.

• Connecticut, like many states, has strong employment protection laws that make it easier for employees to file claims.

For example, imagine you let an employee go due to performance issues. If they believe it was discriminatory, you could be facing a lawsuit—even if your decision was justified.

What Does EPLI Coverage Include?

EPLI coverage varies by policy, but here’s a typical breakdown:

Covered by EPLI	Not Typically Covered
Wrongful termination	Wage & hour disputes (separate coverage may be needed)
Harassment claims	Workers’ compensation claims
Discrimination	Bodily injury & property damage (covered by General Liability)
Retaliation	Intentional illegal acts by the employer
Failure to hire/promote	Fines & penalties imposed by law

This makes EPLI a crucial complement to your existing General Liability Insurance or Business Owner’s Policy (BOP).

How Much Does EPLI Insurance Cost in 2025?

The cost of EPLI in 2025 depends on your business size, number of employees, industry, and claims history.

On average:

• Small businesses with fewer than 50 employees may pay between $1,200 – $3,000 per year.

• Higher-risk industries (like healthcare or hospitality) can expect more.

• Adding EPLI as an endorsement to a BOP is often cheaper than purchasing a standalone policy.

💡 Pro Tip: Working with an independent insurance broker in Connecticut (like Insure Connecticut LLC) helps you compare multiple carriers to find the most competitive rates.

Do Small Businesses Really Need EPLI?

Here’s the bottom line: yes, they do.

Consider this—the average cost to defend an employment lawsuit is $75,000, and settlements can easily climb into six figures. For many small businesses, that’s enough to cause financial devastation.

EPLI gives you:

• Financial protection from lawsuits

• Peace of mind to focus on growth, not legal battles

• A safety net that shows employees you take workplace protections seriously

In other words, EPLI isn’t just about insurance — it’s about protecting the future of your business.

How to Get EPLI Coverage in Connecticut (and Beyond)

The good news? EPLI is flexible. You can get it:

• As a standalone policy

• As an add-on to a Business Owner’s Policy (BOP)

• Bundled with General Liability or Professional Liability coverage

At Insure Connecticut LLC, we specialize in helping small businesses navigate EPLI and other critical insurance coverages. As a trusted insurance broker in Connecticut, we’re not tied to one carrier — we shop multiple options to find coverage that fits your budget and needs.

👉 Ready to protect your business? Request a free EPLI quote from Insure Connecticut LLC today.

Final Thoughts

EPLI isn’t just a policy for large corporations—it’s an essential safeguard for small businesses in Connecticut and across the U.S. Employee lawsuits are unpredictable, costly, and potentially devastating, but with EPLI, you don’t have to face them alone.

At Insure Connecticut LLC, we help business owners like you understand your risks, compare coverage, and secure policies that make sense.

✅ Protect your business and your peace of mind—request your EPLI quote today.

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FAQs About EPLI Insurance

Is EPLI required by law?

No, it isn’t legally required, but it’s strongly recommended given the high costs of defending employee claims.

Does general liability cover employee lawsuits?

No. General liability covers third-party bodily injury and property damage, but not employee-related claims. That’s where EPLI comes in.

Can part-time employees or contractors sue my business?

Yes — EPLI can cover claims from full-time, part-time, and seasonal employees and, in many cases, independent contractors.

Can I bundle EPLI with other business insurance?

Absolutely. Many small businesses save money by adding EPLI to their BOP or general liability package.