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Understanding Employment Practices Liability Insurance Policy Denials

by | Feb 29, 2024 | Insurance Coverage Planning, Insurance Recovery |

Employment Practices Liability Insurance (often referred to as EPLI) provides crucial protection for businesses, offering coverage against claims of workplace-related issues such as discrimination, harassment, wrongful termination, and allegations of a violation of an employee’s rights. However, there are instances when claims made under these policies may be denied, leaving employers vulnerable to legal and financial consequences.

In theory, an employer that has the necessary coverage should receive financial protection in the event of a lawsuit. These companies are notorious for fighting back — for denying or not providing full benefits as outlined within the insurance policy. But what happens if your EPLI provider fails to pay out a claim? As a business owner, it is crucial to understand your options.

Review the denial

If a claim is denied, it is important to review the denial letter carefully, as the letter should provide specific reasons for the denial, including reference to relevant policy language or exclusions. Check your policy to verify that the policy language cited is also in the copy of the EPLI policy that was delivered to you. While reviewing the letter, note any deadlines for challenging the denial. A failure to abide by these deadlines can mean you lose the chance to move forward with your claim.


It is generally wise to consult with an attorney specializing in insurance law to interpret the policy language and the basis for the insurer’s denial of coverage. Your attorney can help you draft a formal response if the denial was based on a misunderstanding, incorrect information, or the misapplication of the policy language.

At this early step, a legal representative can help negotiate on your behalf to potentially reach a settlement.

Know Your Resolution Options

In cases where disputes cannot be resolved informally, mediation, arbitration, or a bad faith lawsuit may be pursued. These processes involve neutral third parties who can assist in negotiations and provide a means to settle the dispute with or without going to court.

Do not delay in responding to a denied claim, as this can affect your ability to challenge it. It is important to be proactive in protecting your rights and your business’s financial well-being.

While Employment Practices Liability Insurance provides valuable protection for businesses, claim denials can pose significant challenges. By understanding their policies employers can take proactive steps to protect their interests and navigate the claims process effectively.

If your insurance provider fails to pay out an EPLI claim, it is essential to take immediate and informed action. Our experienced attorneys are here to help you understand your rights, challenge claim denials, and protect your business interests. Schedule a consultation today to explore your options and ensure that your rights are protected.