1. Forms
2. EP
3. EP-01-15

What the Form Is

The EP 01 15 Named Employee Exclusion is an amendatory endorsement used with an Employment-Related Practices Liability (EPLI) insurance policy. Its primary purpose is to exclude coverage for any claims brought against specific individuals who are explicitly named in the endorsement. While the actions of these named individuals will not be covered for their personal liability, the endorsement typically preserves coverage for the named insured (the organization) if it is held liable for its own separate wrongdoing, such as negligent supervision or vicarious liability related to the conduct of the excluded employee.

Classes of Business It Applies To

This endorsement can be applied to any class of business that carries an EPLI policy. It is typically used in situations where an underwriter identifies a particular employee (or former employee who might still generate claims) as posing a higher-than-average risk for employment-related claims. Examples include:

• Companies that have an employee with a documented history of harassment or discriminatory behavior.
• Organizations where a specific manager or executive has been the subject of multiple past employment-related complaints.
• Situations where, as a condition of providing EPLI coverage, the insurer requires the exclusion of an individual whose past conduct presents a significant underwriting concern.

Special Considerations

• Clarity of Identification: It is crucial that the individuals to be excluded are clearly and unambiguously identified in the endorsement to avoid any confusion regarding the scope of the exclusion.
• Named Insured's Continued Coverage: A key aspect is that the named insured organization often retains coverage for its own liability stemming from the excluded employee's actions (e.g., negligent hiring, retention, or supervision). This means if the company is sued because it failed to properly manage the excluded employee, the policy may still respond for the company's defense and liability, even though the employee themselves is not covered.
• Employee Notification: While not a policy provision, employers should consider the implications and potential legal or HR best practices regarding notifying an employee that they are being excluded from coverage under the EPLI policy.
• State Regulations: While ISO forms aim for broad applicability, specific state laws or regulations might impact the application or wording of such exclusions.

Key Information for Agents and Underwriters

• Risk Management Tool: For underwriters, this endorsement is a critical tool to manage specific, identifiable risks associated with particular individuals, potentially allowing them to offer EPLI coverage to an otherwise uninsurable or high-risk account.
• Pricing Implications: The use of this endorsement might make a risk more acceptable to an underwriter, potentially impacting the premium. The alternative might be a declination of coverage or a significantly higher premium if the high-risk individual were not excluded.
• Agent's Role: Agents must clearly explain the scope and limitations of this endorsement to their clients. It's important the insured understands that while the company may have some continued protection, the named individuals will have no personal coverage under the policy for their wrongful acts.
• Coverage Gap for Excluded Employee: The excluded employee will have a significant coverage gap and would be personally liable for judgments and defense costs related to their employment practices.
• Underwriting Justification: Underwriters will require clear justification and documentation for requesting or applying this endorsement, typically linked to the claims history or known conduct of the individual(s) being excluded.