1. Forms
2. EP
3. EP-01-17

What the form is

The EP 01 17 - Liability to Your Customers or Clients endorsement is designed to modify an Employment-Related Practices Liability (ERPL) insurance policy. Its primary function is to extend coverage to the insured organization for certain types of claims made by its customers or clients. Specifically, this endorsement provides coverage for liability arising from alleged wrongful acts committed against customers or clients, but only if those wrongful acts are due to discrimination. Without this endorsement, ERPL policies typically focus on employment-related claims from employees, former employees, or applicants for employment.

Classes of business it applies to

This endorsement is particularly relevant for businesses that have significant interaction with the public and, as a result, face a higher risk of discrimination claims from third parties such as customers or clients. Examples include:

• Retail stores: Allegations of profiling or discriminatory service.
• Restaurants and hospitality: Claims related to denial of service or discriminatory treatment based on protected characteristics. For instance, a restaurant employee refusing to seat a group based on their attire, believing they might not pay, leading to a discrimination lawsuit.
• Service providers: Businesses offering services directly to the public where interactions could lead to perceived discrimination.
• Healthcare facilities: While professional liability would cover malpractice, this endorsement could address discrimination claims by patients not related to the medical treatment itself.

Special considerations

There are several important points to consider regarding the EP 01 17 endorsement:

• Limited Scope: Coverage is specifically for wrongful acts due to discrimination against customers or clients. It does not cover all types of third-party claims. Other wrongful acts, such as harassment by an employee against a customer (if not discrimination-based under the policy's definition of wrongful act in this context), might not be covered unless specified elsewhere.
• Definition of Wrongful Act: The policy's definition of "wrongful act" will be crucial in determining the extent of coverage provided by this endorsement.
• Exclusions: The underlying ERPL policy exclusions will still apply, and this endorsement may have its own specific exclusions or limitations.
• Necessity: Businesses should carefully evaluate their actual exposure to third-party discrimination claims. While valuable, it may not be necessary for all types of businesses.

Key information for agents and underwriters

• Risk Assessment: Underwriters need to assess the increased risk exposure from third-party discrimination claims. This includes evaluating the nature of the insured's business, its customer interaction protocols, employee training on discrimination and customer service, and any history of similar claims.
• Pricing: The addition of this endorsement will likely impact the premium, reflecting the broadened coverage.
• Coverage Gaps: Agents should discuss with clients whether this endorsement adequately addresses their third-party liability concerns or if other coverages (e.g., General Liability, specific third-party liability policies) might also be needed for non-discrimination related wrongful acts by employees towards customers.
• Clarity of Coverage: It's important for agents to clearly explain the scope and limitations of this endorsement to the insured, particularly that it is tied to discrimination.
• Underwriting Guidelines: Insurers will have specific underwriting guidelines for offering this endorsement, which may include reviewing the insured's anti-discrimination policies and training programs for customer-facing employees.