EMPLOYMENT-RELATED PRACTICES LIABILITY COVERAGE FORM SAMPLE INSURANCE PROPOSAL LANGUAGE

(August 2019)

REPRINT PERMISSION

All PF&M subscribers are permitted to reprint the following insurance proposal sample language when preparing insurance presentations for their commercial insurance customers. Other uses require permission by The Rough Notes Company, Inc.

PROPOSAL DISCLAIMER

The following paragraph or similar language must be included in all insurance proposals:

Consult the policy for definitions and limitations. The terms of this proposal do not represent contract terms. The policy is subject to company underwriting practices.

TIPS FOR USING THIS PROPOSAL LANGUAGE

This proposal language is not intended to be an entire insurance proposal. A client-specific section including the name and address of the insured, the insurance company(s) and the agent, and information about them, a list of locations, limits, deductibles, and similar customer specific items are not included and should be prepared.

The intent of any insurance proposal is not to be a reproduction of the insurance policy, but to give a summary of possible coverages.

Paragraphs explaining coverages unique to this policy form may be the most important addition to your insurance proposal and sales effort. Coverage examples can be tailored to your individual customer. When altering any proposal language, be careful not to imply that coverage is broader than what exists in the policy.

This proposal should be combined with proposals for other lines of business, such as commercial property, general liability, workers compensation, and umbrella liability, for a complete account proposal.

ISO Employment-related Practices Liability Coverage Form Available Endorsements and Their Uses provides a brief description of endorsements that may be attached to either of the ISO Commercial General Liability Coverage Forms.

ISO Employment-related Practices Liability Coverage Form Endorsements Checklist is a checklist and quick reference of all endorsements available.

SAMPLE PROPOSAL LANGUAGE FOR THE INSURANCE SERVICES OFFICE (ISO) EMPLOYMENT-RELATED PRACTICES LIABILITY COVERAGE FORM

INTRODUCTION

Employment-related Practices Liability Coverage provides broad insurance protection from employment-related claims and lawsuits brought against an entity, its managers, its employees and/or its directors and officers. It covers such things as age and gender discrimination, sexual harassment, wrongful discipline, termination, and negligent decisions involving hiring, promotion, and compensation. It also applies to breach of employment contract, emotional distress, and mental anguish, invasion of privacy, libel, slander, and mismanagement of employee benefits. The exposures presented by a given employer can vary substantially, depending on the particular factors involved. This includes the number of employees, the location of the risk, the specific industry, employment practices, unique characteristics of the operation and loss experience.

EMPLOYMENT-RELATED PRACTICES LIABILITY COVERAGE

NOTE: Defense Costs Are Included Within the Limits of Insurance

Insuring Agreement

The insurance company agrees to pay amounts the insured is legally obligated to pay as damages for wrongful acts that are covered by the insurance provided, up to the limits of insurance. A wrongful act means any one or more of the following employment-related acts:

Wrongful demotion or failure to promote, negative evaluation, reassignment or discipline of a current employee or wrongful refusal to employ
Wrongful actual or constructive termination of an employee in violation or breach of the law, public policy or a non-employment contract or agreement
Wrongful denial of training, deprivation of career opportunity or breach of employment contract
Negligent hiring or supervision resulting in any of these offenses.
Retaliatory actions against an employee
Coercion of an employee to perform illegal acts
Harassment
Libel and other types of personal injury
Any type of abuse emanating from discrimination

The insurance company has both the right and the duty to defend any suit against an insured for those damages and it may investigate or settle any claim or suit at any time and at its sole discretion. The company's obligation to pay ends when the limits of insurance are exhausted by the payment of defense expenses, judgments and/or settlements.

Exclusions

Exclusions must be examined carefully because many of them have conditions, exceptions, limitations or restrictions not shown below. Coverage does not apply to:

Criminal, Fraudulent Or Malicious Acts

An insured's liability as a result of criminal, fraudulent or malicious acts or omissions by that insured is excluded. The insurance company's defense duty remains until legally determining criminal, fraudulent or malicious act or omission have been legally determined.

Contractual Liability

No coverage is available when the liability is solely due to an insured assuming an obligation for a wrongful under a contract or agreement.

Workers Compensation And Similar Laws

Any obligations of the insured imposed by any workers compensation, disability benefits, unemployment compensation or similar law are excluded.

Violation Of Laws Applicable To Employers

Coverage does not apply to the named insured's violation of its responsibilities or duties required by any federal, state or local statute, rule or regulation, and any related rules and regulations developed to apply to them. The exceptions are any of the following:

Title VII of the Civil Rights Act of 1964
The Americans with Disabilities Act (ADA)
The Age Discrimination in Employment Act
The Equal Pay Act
The Pregnancy Discrimination Act of 1978
The Immigration Reform and Control Act of 1986
The Family and Medical Leave Act of 1993
The Genetic Information Nondiscrimination Act of 2008
Any other similar state or local statute, rule or regulation that prescribes responsibilities or duties involving the same acts or omissions.
Amendments to the above

A wrongful act that is the result of the named insured's failure to comply with required accommodations for the disabled and any expenses incurred resulting from required accommodations for the disabled due to ADA or any amendments to the act continues to be excluded.

There is no exclusion for claims alleging retaliatory treatment by an insured against any person making a claim as a result of that person's rights under any statute, rule, or regulation.

Strikes And Lockouts

Any wrongful act committed against any striking or locked-out employee, or to an employee temporarily or permanently replaced due to a labor dispute, is excluded.

Prior Or Pending Litigation

No claim or suit that is brought against any insured is covered if that suit or claim existed or was pending before the applicable Pending or Prior Litigation Date shown on the declarations. This exclusion applies to claims or suits that arise out of the same or substantially the same facts, circumstances, or allegations that are the subject of or are the basis for such claims or suits.

Prior Notice

If a claim had been reported or a notice had been given under a prior insurance policy, there is no coverage under this insurance policy for any wrongful act within that reported claim or notice. There is a requirement that the prior insurance policy must provide coverage similar to that which is part of this insurance policy.

Supplementary Payments

With respect to claims it investigates or settles, or suits against the insured it defends, the insurance company pays:

Prejudgment interest awarded against the insured on the part of a judgment the insurance company pays but only for the time period before the insurance company offers to pay the coverage limits.
All interest on the full amount of any judgment that accrues after entry of the judgment until the insurance company pays, offers to pay or deposits in the court the part of the judgment that is within its limit and for which it is liable.

These payments do not reduce the limit of insurance and are not subject to any deductible.

WHO IS AN INSURED

The following are insureds based on the type of entity entered on the declarations:

An individual, then the individual and the individual's spouse are insureds.
A partnership or joint venture, then the joint venture is an insured as are its members and partners.
A limited liability company, then the limited liability company is an insured as are its members and managers.
Any other organization, then the organization is an insured as are its executive officers and directors.

The named insured's employees and former employees are also insureds unless specifically excluded.

Any newly formed or acquired organization over which the named insured maintains ownership or majority interest qualifies as a named insured but only when no other similar insurance applies for that organization. This extension does not apply to partnerships, joint ventures or limited liability companies.

The named insured must inform the insurance company of the new organization as soon as practicable but lasts no longer than 90 days or the coverage expiration whichever is shorter.

No organization or person is an insured concerning the conduct of any current or previous partnership, joint venture or limited liability company that is not listed as a named insured on the declarations.

LIMITS OF INSURANCE

Note: Defense Costs Are Included Within the Limits of Insurance

The limits apply separately to each consecutive annual period and to any remaining period of less than 12 months. This begins with the coverage inception date shown on the declarations unless extended after issuance for any additional period of less than 12 months. If that occurs, the additional period is treated as part of the last preceding period for the purpose of determining the limits of insurance.

The most the insurance company pays are the limits of insurance on the declarations, regardless of the number of insureds, claims made, or suits brought and number of parties making claims or bringing suits.
The most the insurance company pays for the sum of all damages and all defense expenses because of wrongful acts covered by this insurance is the limit of insurance on the declarations.

DEDUCTIBLE

The insurance company does not pay for its share of damages and defense expenses until the deductible amount is exceeded. Damages and defense expenses are then paid up to the limit of insurance.

The deductible amount is a common cause deductible applying to all claims arising out of the same wrongful act or series of incidents, circumstances or behaviors resulting from that common cause. The insurance company can pay all or any part of the deductible in order to expedite settlement of a claim and when it does the named insured is required to reimburse the company for any deductible amounts it paid.

CONDITIONS

Bankruptcy

The insurance company is not relieved of its obligations in the event of the insured's or the insured estate's bankruptcy or insolvency.

Consent To Settle

The named insured has the right to not consent to a settlement between the insurance company and a claimant. However, when such a refusal occurs the most the company pays as damages is limited to the amount for which the claim could have been settled.

Duties In The Event Of A Claim Or Wrongful Act That May Result In A Claim

The named insured is responsible for immediately recording when any claims, from the named insured or any insured is received. The insurer is required to receive a written notice of the claim from the named insured as soon as practical.
Every insured involved in or with the claim must immediately send the insurance company copies of demands, notices, summonses and legal documents that are part of a claim or suit. Authorization must be provided to that the insurer can obtain records and other needed information. It is vital that cooperation take place when the insurer is investigating and/or settling a claim or defending against a suit. After settlement or judgment cooperation is also required to that the insurer can enforce any rights they may have against any person or organization who is liable for injury or damage
An insured may voluntarily make payments, assume any obligations, and incur expenses but the insurance company will not reimburse or accept obligations unless the insurance company consented, in writing, to them.
The named insured must inform the insurance company in writing as soon as practicable if it has knowledge of a wrongful act that may lead to a claim. The information should be as detailed as possible including how the insured became aware of the act.

Legal Action Against Us

The insurance company cannot be joined into a lawsuit against an insured and the insurer cannot be sued by an insured unless all terms of the policy have been met. The insurance company is not liable for any amount in excess of limit of insurance or for payment of amounts that a part of the deductible.

Other Insurance

The coverage provided is primary. If another policy is also primary for the same loss, the two companies will pay a claim covered by both either on a contribution by equal shared or contribution by limit.

The named insured continues to be responsible for the full deductible.

Premium Audit

All premiums are calculated according to the insurance company's rules and rates.
The initial premium collected is a deposit premium. The actual premium is determined at the end of the audit period. When the premium is calculated, a return premium is provided to the named insured if the actual is less than the deposit. If the actual premium is higher the deposit, the premium is due as of the date of the billing notice. It is the responsibility of the first named insured to keep the records so that the insurance company can make the final calculations.
The insurance company must conduct an audit and develop the actual premium unless the named insured agrees to its waiver.

Representations

By accepting the insurance policy, the named insured agrees that all information is accurate and based on the applications and representations it made.

Separation Of Insureds

Each named insured is treated as a separate named insured and each insured is treated as a separate insured. The only exceptions to this are that the first named insured has some additional rights and responsibilities and the limit of insurance section.

Transfer Of Rights Of Recovery Against Others To Us

The insured transfers its rights of recoveries against others to the insurance company. The insured must not do anything to hinder its rights and must assist the insurance company in enforcing those rights.

If You Are Permitted To Select Defense Counsel

The named insured can request its own defense counsel. When granted, the insurance company retains the right to settle, approve or disapprove the settlement of any claim or suit and appeal any judgment, award or ruling at its own expense and at its discretion.

When the insurance company is defending under a reservation of rights, both counsels must keep records that relate to the named insured's defense expenses in order to determine an allocation of defense expenses.

Transfer Of Duties When A Limit of Insurance Or The Defense Expense Amount Is Used Up

Because defense expenses are within the limit of insurance, this condition is included to detail the procedures to be taken when the defense is transferred from the insurance company to the named insured when the available limits have been exhausted.

When We Do Not Renew

The insurance must provide a minimum of 30 days’ notice it will be nonrenewing.

EXTENDED REPORTING PERIOD

Claims that are received after a policy period has ended are not covered unless the period in which to report claims has been extended.

The named insured has the right to purchase an Extended Reporting Period whenever the policy is canceled, not renewed or replaced by a policy with a retroactive date that has been advanced, if the policy is no longer on a claims-made basis.
The available Extended Reporting Period lasts for only three years. An endorsement must be attached when it is requested, and an additional premium charge is due.
The Extended Reporting Period is very specific. It takes effect at the end of the policy period but does not extend the policy period or change the scope of coverage provided. It only applies to claims subject to all of the following:

The claim is first made during the Extended Reporting Period
The wrongful act occurs before the end of the policy period
The wrongful act did not begin before the Retroactive Date.

The named insured has only 30 days in which to request the Extended Reporting Period.
The premium must be paid, or the Extended Reporting Period does not become effective. In addition, the named insured must pay any other premium due and deductible that is owed. One the Extended Reporting is put into effect it cannot be cancelled.

DEFINITIONS

Refer to the policy for a list and description of policy definitions.