What Do You Mean My Deductible Is Infinity?

Author, Kevin Howard, CRIS, Account Executive, Rancho Mesa Insurance Services, Inc.

Two men holding insurance papers and discussing them at a table

Employment Practices Liability Insurance (EPLI)

Employment Practices Liability Insurance (EPLI) can protect companies from claims related to wrongful termination, discrimination, defamation, unfair hiring/firing practices, and wage and hour lawsuits. EPLI policies may also provide defense costs associated with responding to employment related lawsuits.


With the increasing frequency of EPLI claims and 40% of California claims occurring within companies with less than 100 employees, deductibles have risen to previously unseen levels. It is now common to see per claim deductibles at a $10,000 starting point and jumping as high as $50,000. These higher retentions can, at times, deter many employers from securing coverage when they might need it most.


For those employers who elect to self-insure this exposure and go bare without a policy, there is a question that needs to be asked. What is your deductible without EPLI coverage? The simple, very possible answer is that it can be infinity. That is, an employer is responsible for the first dollar to defend along with any future negotiated settlement. That unknown is why many of our clients ultimately purchase EPLI as their balance sheet cannot absorb an infinite loss.


In this unsettling time, across various workforces, it makes good business sense to consider EPLI options with varied deductible ranges. Having that clarity brings comfort to many clients who have worked years to build their business, acquire assets, and improve their net worth. Exposing their business to what could very well be unlimited costs creates considerable risk moving forward.


Misconception: “If I file an EPLI claim, I will owe the entire deductible upfront.”

Truth: When a claim is filed, policy holders will team up with an attorney who will bill hours until your self-insured retention is met. This could run the course of years with small bills being paid out over time.

Misconception: “I can’t afford to pay an entire annual premium at once, on top of my other insurance renewal premiums.”

Truth: Rancho Mesa can generate a finance plan that will allow you to pay your premiums over a 12 month period.

Misconception: “If I ever have a claim occur, I will just purchase a policy at that time to protect my business.”

Truth: EPLI carriers include prior acts exclusion for this very reason. Any claim that has been made, even in its infant stages, will be declined. You must have a policy in place in advance in order to protect yourself.

Misconception: “I have never had an EPLI claim. Why would I have one now?”

Truth: The California mandate AB 1825 and SB 1343 have increased awareness and visibility of employment related lawsuits. In light of workplace discrimination concerns and the #MeToo movement, the State of California requires all employers with more than 5 employees to conduct Sexual Harassment Prevention Training.

Misconception: “My general liability policy covers EPLI.”

Truth: General liability carriers exclude employment practices liability. If you were to file a claim they would deny coverage.

Business owners deserve a clear explanation of ways to protect themselves from insurable risk. If you would like to discuss how your business is protected, please contact Rancho Mesa Insurance Services, Inc. at (619) 937-0164.