1. Forms
2. EP
3. EP-01-37

What the Form Is

The EP 01 37, titled "Malicious Prosecution Coverage," is an endorsement designed to modify an Employment-Related Practices Liability (ERPL) insurance policy. Its primary function is to broaden the scope of the ERPL coverage by specifically adding protection against claims of malicious prosecution brought by an insured's employees against the insured employer. Standard ERPL policies may not automatically cover such claims, making this endorsement a crucial addition for businesses seeking comprehensive protection in this area.

Classes of Business It Applies To

This endorsement is applicable to any business or organization that has or is considering an Employment-Related Practices Liability insurance policy. It is particularly relevant for employers who might face an elevated risk of retaliatory legal actions from current or former employees. Such risks can arise following disciplinary measures, terminations, or internal investigations that an employee perceives as leading to a baseless or maliciously pursued legal proceeding initiated or instigated by the employer.

Real-world example: Imagine a company terminates an employee based on allegations of corporate espionage and subsequently reports the individual to law enforcement, which leads to an arrest and charges. If the employee is later found not guilty and believes the employer's pursuit of the matter was without merit and driven by malice, the employee might sue the employer for malicious prosecution. If the EP 01 37 endorsement is part of the employer's ERPL policy, it would typically respond to cover defense costs and any potential settlement or judgment, subject to policy terms and limits.

Special Considerations

• Optional Coverage: This is an elective endorsement and is not automatically part of a standard ERPL policy.
• Employee-Specific: The coverage provided by this endorsement is specifically for malicious prosecution claims initiated by the insured's own employees.
• Policy Definitions: The exact scope of what constitutes "malicious prosecution" and the conditions under which coverage applies will be detailed in the endorsement language and the main ERPL policy.
• State Variations: While it is an ISO (Insurance Services Office) form, its availability and specific wording might be subject to state-specific approvals or modifications. For instance, the EP 01 37 09 07 edition was approved for use in California.

Key Information for Agents and Underwriters

For Agents:

• Proactively discuss this endorsement with clients, especially those in industries with higher litigation rates or those with a history of contentious employee relations.
• Clearly explain that this endorsement fills a potential gap for malicious prosecution claims brought by employees, which might not be covered under an unendorsed ERPL policy.
• Advise clients to carefully review their overall risk management strategies concerning employee discipline and termination to minimize such exposures.

For Underwriters:

• When evaluating an insured for this endorsement, thoroughly assess their human resources practices, employee handbook, termination procedures, and any history of employee lawsuits, particularly those alleging malicious prosecution or similar retaliatory actions.
• The pricing of this endorsement should correspond to the increased risk. Consider factors such as the insured's industry, size of workforce, employee turnover, past claims history, and the prevailing legal climate in their operating jurisdictions.
• Inquire about the employer's protocols for initiating or participating in legal proceedings against employees to better understand the potential exposure.