Insurance to protect against claims of poor employment practices is virtually essential for companies today. Still, many company decision-makers may question whether the company can really afford this coverage. Understanding the factors that influence employment practices liability insurance pricing can help companies budget effectively and identify potential ways to lower costs.
Industry and Track Record
An employer’s record of past claims will usually influence premium rates. Employers with a high number of incidents will generally be viewed as greater risks. Additionally, the company’s industry may be taken into account. Industries with high rates of turnover, such as service and retail, statistically have a greater risk of claims. Similarly, industries that employ highly educated people in high-paying jobs have a higher risk of costly claims, as these employees may be more inclined to pursue compensation through a lawsuit.
Sometimes, providers offering employment practices liability insurance will reduce premiums if policyholders take initiatives to reduce claims. Such initiatives could include training employees on appropriate conduct and resources for reporting violations; re-writing policies on hiring, promotion, and termination to make them more clear; and increasing disciplinary action against employees who violate policies. These measures can all reduce the risk of claims.
Start Comparing Options
Employment practices liability insurance coverage is an essential investment for any company. Though budgeting for enhanced insurance coverage may be difficult for some companies, the protection is still much more affordable than the cost of directly dealing with an employment practices claim.