1. Forms
2. EP
3. EP-01-02

What the Form Is

The EP 01 02, titled "Amendatory Endorsement--Employees As Insureds," is an insurance policy endorsement designed by ISO (Insurance Services Office) for use with Employment-Related Practices Liability (ERPL) insurance policies, such as the EP 00 01 Coverage Form. Its core purpose is to modify or clarify the definition of "employee" within the "Who Is An Insured" section of the ERPL policy. This is important because the definition of an employee can vary, and this endorsement helps tailor the coverage to the specific structure and needs of the insured organization, ensuring clarity on which individuals are covered under the policy for employment-related claims.

Classes of Business It Applies To

This endorsement is applicable to virtually any business or organization that employs individuals and carries Employment-Related Practices Liability insurance. ERPL coverage is vital for entities of all sizes and across all industries, as any employer faces potential liability from claims alleging wrongful employment acts. Such claims can include discrimination, harassment, wrongful termination, retaliation, failure to promote, and other employment-related issues.

Real-world examples:

• A technology company with a diverse workforce including full-time salaried staff, part-time hourly workers, and paid interns might use the EP 01 02 endorsement to ensure all these categories of personnel are explicitly included as 'insureds' under their ERPL policy.
• A restaurant group that utilizes a mix of permanent and seasonal employees could attach this endorsement to clarify that seasonal staff are also considered employees for the purposes of ERPL coverage during their employment.
• A professional services firm that leases some administrative staff from a Professional Employer Organization (PEO) would need to carefully review their ERPL policy and potentially use this endorsement (or specific wording) to ascertain if these leased employees fall within the definition of an insured employee.

Special Considerations

• Clarity and Ambiguity Reduction: The definition of an "employee" can be a significant factor in determining coverage for an ERPL claim. The EP 01 02 endorsement aims to reduce potential disputes by providing a more precise or expanded definition.
• Policy Context is Crucial: This endorsement does not stand alone. It must be read and interpreted in conjunction with the main ERPL coverage form (e.g., EP 00 01) and any other applicable endorsements to understand the full scope and limitations of coverage.
• Scope Limitations: While this endorsement amends the definition of an employee, it's important to note that it may not extend coverage to all types of workers. For instance, independent contractors are typically not considered employees and would usually require separate consideration or a different type of endorsement if ERPL coverage for claims brought by them against the company is desired and available.
• Claims-Made Policies: Most ERPL policies are written on a claims-made basis. This means the policy in effect at the time a claim is first made against an insured is the policy that will respond, subject to its terms and conditions, including the definition of "employee" as modified by endorsements like EP 01 02.

Key Information for Agents and Underwriters

• Risk Assessment: Underwriters need a clear understanding of the insured's workforce composition (e.g., number of full-time, part-time, temporary, leased employees, volunteers if applicable) to accurately assess the employment practices liability exposure. The EP 01 02 endorsement helps define the scope of individuals whose actions (as perpetrators) or status (as claimants) could trigger coverage.
• Tailoring Coverage: Insurance agents should discuss with their clients whether the standard definition of "employee" in their ERPL policy is adequate or if the EP 01 02 endorsement is necessary to cover all individuals the organization intends to protect or be protected against claims from. This helps prevent coverage gaps.
• Pricing Impact: The breadth of the definition of "employee" can influence the premium. A broader definition might be perceived as increasing the potential number of claimants or insured individuals, which could affect the underwriting risk and, consequently, the policy cost.
• Consistency: It's advisable for the definition of employee in the insurance policy to be consistent with how the insured organization classifies and treats its workers in its employment agreements, handbooks, and overall practices.
• Multistate Operations: While this is often a multistate form, variations in state-specific employment laws can impact how terms like "employee" are interpreted. Clear policy language, as provided by this endorsement, becomes even more critical for businesses operating in multiple jurisdictions.