1. Forms
2. EP
3. EP-24-17

What the Form Is

The CL EP 24 17 Non-Monetary Relief Defense Expense Endorsement is an amendment to an Employment Practices Liability (EPL) insurance policy. Its primary purpose is to provide coverage for defense expenses that arise from claims or portions of claims seeking non-monetary relief. Non-monetary relief typically includes legal remedies such as injunctions, court orders for an employee's reinstatement, requirements to implement new company policies, or mandated employee training, as opposed to direct financial compensation.

Classes of Business It Applies To

This endorsement is applicable to a wide range of businesses and organizations that have or are seeking Employment Practices Liability Insurance. It is particularly relevant for employers who face a higher risk of employment-related lawsuits that demand actions other than, or in addition to, monetary damages. Examples include:

• A technology company sued by a group of former employees alleging discriminatory hiring practices, where the lawsuit demands changes to the company's recruitment policies and mandatory diversity training for all managers, alongside claims for damages.
• A manufacturing firm facing a wrongful termination lawsuit where the ex-employee is primarily seeking reinstatement to their former position and a court order to expunge their personnel record.
• A retail chain that receives a demand letter from a civil rights organization threatening litigation unless the company modifies its customer service protocols and provides specific training to its staff to prevent alleged profiling.

Special Considerations

It's important to understand that standard EPL policies often define "Loss" to include judgments, settlements, and defense costs, but this coverage can sometimes be ambiguous or limited when claims primarily involve non-monetary demands. This endorsement clarifies or adds coverage for the legal costs associated with defending against such non-monetary actions.

• Policy Language Interaction: The endorsement's effect is tied to the main EPL policy's definitions of "Loss," "Claim," and "Defense Expenses." It's crucial to review these in conjunction with the endorsement.
• Sublimits: Coverage for non-monetary relief defense expenses might be subject to a specific sublimit, which could be lower than the main policy aggregate.
• Insurer Variations: The availability, exact wording, and scope of this type of endorsement can differ among insurance carriers.
• Triggering Coverage: This endorsement becomes critical when a significant portion of the legal defense is dedicated to addressing demands for non-monetary remedies, or if a claim seeks *only* non-monetary relief, which might otherwise not trigger defense cost coverage under some policies. For instance, if an employee sues solely for reinstatement after an alleged unfair dismissal, without this endorsement, the insured might bear all defense costs.

Key Information for Agents and Underwriters

• Pricing: A modest additional premium may be charged for this endorsement, reflecting the broadened scope of defense coverage.
• Risk Assessment: Businesses in sectors with high employee turnover, those undergoing significant restructuring, or companies with a history of contentious employment disputes may have a greater need for this coverage. Underwriters should evaluate the applicant's human resources practices, employee handbooks, internal dispute resolution mechanisms, and prior litigation history involving non-monetary demands.
• Identifying Coverage Gaps: Agents should highlight this endorsement to clients as a way to mitigate the risk of incurring substantial out-of-pocket legal fees for defending claims that don't primarily seek monetary damages.
• Underwriting Guidelines: Underwriters will assess the overall EPL risk profile. The presence of robust HR policies, regular legal review of employment practices, and a proactive approach to employee relations can be positive underwriting factors. It's important to ensure the insured understands any specific conditions, exclusions, or sublimits that apply to the coverage provided by this endorsement.