1. Forms
2. EP
3. EP-21-01

What the Form Is

The EP 21 01 Exclusion - Designated Ongoing Operation(s) endorsement is an Insurance Services Office (ISO) form used to modify an Employment-Related Practices Liability (ERPL) insurance policy. Its primary function is to exclude coverage for any claims related to specific, clearly identified ongoing operations of the insured business. If a particular location is specified in the endorsement, the exclusion applies only to the designated operations at that location. However, if no location is listed, the exclusion applies to the designated operations wherever they are conducted by the insured.

Classes of Business It Applies To

This endorsement can be applied to any class of business that carries Employment-Related Practices Liability insurance where the insurer identifies a particular ongoing operation as posing an unacceptably high risk for EPL claims. Examples include:

• A company with a specific department or division that has a history of frequent employment-related lawsuits. The insurer might agree to provide EPL coverage for the company but exclude claims arising from that particular department's operations.
• A business that is undergoing significant restructuring or downsizing in one part of its operations, leading to a higher risk of wrongful termination or discrimination claims specifically from that restructuring activity.
• An insured that engages in a controversial or high-profile type of operation that, while legal, attracts negative publicity and could lead to employment-related claims (e.g., related to employee conduct or public statements tied to that operation).

Special Considerations

Several important points must be considered when using the EP 21 01 endorsement:

• Specificity is Key: The 'designated ongoing operation(s)' must be clearly and unambiguously described in the endorsement schedule. Vague descriptions can lead to disputes at the time of a claim.
• Impact on Coverage: The insured must fully understand that this endorsement creates a significant gap in their EPL coverage for the specified operations. Alternative risk management strategies may be needed for the excluded operations.
• Underwriting Tool: This endorsement is primarily a tool for underwriters to manage risk. It allows them to provide coverage for the majority of an insured's operations while carving out a specific problematic exposure that would otherwise make the entire risk unacceptable.
• Location Specificity: Careful attention should be paid to whether a location is listed. If an operation is conducted at multiple sites, and no location is listed, the exclusion applies broadly. If a location is listed, the same operation at a different, unlisted location might still be covered (subject to other policy terms).

Key Information for Agents and Underwriters

For Agents:

• Thoroughly explain the scope and implications of this exclusion to the insured. Ensure they understand which operations are no longer covered for EPL claims.
• Document the discussion and the insured's acknowledgment of the exclusion.
• Advise the client to review the description of the 'designated ongoing operation(s)' for accuracy and completeness.

For Underwriters:

• Use this endorsement judiciously when a specific, identifiable part of an insured's operations presents a high EPL risk that cannot be mitigated through other means (e.g., higher deductibles or improved risk management practices by the insured).
• Ensure the wording used to describe the excluded operation(s) in the schedule is precise to avoid future coverage interpretation issues.
• The presence of this endorsement may influence the overall premium for the EPL policy, as it removes a segment of risk.
• Regularly review the need for this exclusion at renewal, as the risk profile of the designated operation may change over time.