Many employers in California carry employment practices liability insurance. This type of insurance protects the employer from claims by employees who claim the employer infringed on their legal rights as an employee. This is important, as such claims can be very costly should they lead to litigation. However, sometimes such claims are denied in part due to unique coverage issues that generally do not appear in typical liability policies.
For example, sometimes a claim covers “prior acts” — that is, situations that occurred before the policy was entered into. However, such coverage only extends to situations that occurred immediately before the policy was issued. Also, there are generally “retroactive dates” meaning there claims that extend before that date will not be covered.
In addition, certain events that trigger coverage are often based on the specific terms in the insurance policy itself. For example, an oral demand does not necessarily trigger coverage unless the policy states so. Denials can happen if the employer does not promptly inform the carrier of claims made per the terms and conditions of their specific policy. In addition, state law may define exactly what a “claim” is.
Employment practice liability insurance is unique
Employment practices liability insurance policies are important, but unique. A denied claim brought by an employer can be financially disastrous. If an employer believes that they have a valid claim that should have been covered by their insurance, they may need assistance in appealing the denial. Area attorneys can be a useful resource in such situations.