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The Empuls Glossary

Glossary of Human Resources Management and Employee Benefit Terms

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Employee Liability Insurance

Employee liability insurance is a critical component of risk management for businesses, offering protection against various legal claims and financial losses arising from employee-related issues.

What is liability insurance?

Liability insurance is a type of insurance policy that provides protection to individuals and businesses against claims resulting from injuries, accidents, or negligence that cause harm to other people or property. It helps cover legal costs, medical expenses, and damages awarded in lawsuits.

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What does employee liability insurance cover?

Employee liability insurance, such as Employment Practices Liability Insurance (EPLI), Directors and Officers Liability Insurance (D&O), and Errors and Omissions Insurance (E&O), provides coverage for various risks related to employees, including claims of discrimination, wrongful termination, harassment, mismanagement, negligence, or errors in professional services.

What is employee benefits liability insurance?

Employee Benefits Liability Insurance covers the business against errors or omissions in the administration of its employee benefits program. This can include claims related to mistakes in handling employee benefits such as health insurance, retirement plans, or other employee benefits packages.

What are the different types of employee liability insurance?

The different types of employee liability insurance are:

  • Employment practices liability insurance (EPLI): This type of insurance protects businesses from claims related to employment practices such as discrimination, wrongful termination, sexual harassment, and retaliation.
  • Directors and officers liability insurance (D&O): D&O insurance provides coverage for the personal liability of directors and officers of a company in the event they are sued for alleged wrongful acts in managing the company.
  • Errors and omissions insurance (E&O): Also known as professional liability insurance, E&O insurance protects professionals and their companies from claims of inadequate work, negligent actions, or failure to perform professional duties.

What are the benefits of employee liability insurance?

The benefits of employee liability insurance are:

  • Protection for the business: Employee liability insurance shields the business from financial losses and legal expenses associated with employee-related claims, helping to safeguard its assets and reputation.
  • Protection for employees: This insurance also provides a layer of protection for employees, ensuring they have recourse in case of employment-related disputes or allegations.
  • Financial security: Employee liability insurance offers financial security by covering legal defense costs, settlements, and judgments, thereby reducing the financial impact on the business.

What are the factors to consider when purchasing employee liability insurance?

The factors to consider when purchasing employee liability insurance are:

  • Business size and structure: The size and structure of the business play a role in determining the appropriate coverage needed and the level of risk exposure.
  • Industry and risk factors: Different industries face varying levels of risk, so it's essential to assess industry-specific liabilities when selecting insurance coverage.
  • Coverage limits and deductibles: Understanding the coverage limits and deductibles is crucial to ensure adequate protection without overpaying for unnecessary coverage.
  • Carrier reputation and financial stability: Choosing a reputable insurance carrier with a strong financial standing ensures reliability and the ability to fulfill claims obligations.

Employee pulse surveys:

These are short surveys that can be sent frequently to check what your employees think about an issue quickly. The survey comprises fewer questions (not more than 10) to get the information quickly. These can be administered at regular intervals (monthly/weekly/quarterly).

One-on-one meetings:

Having periodic, hour-long meetings for an informal chat with every team member is an excellent way to get a true sense of what’s happening with them. Since it is a safe and private conversation, it helps you get better details about an issue.


eNPS (employee Net Promoter score) is one of the simplest yet effective ways to assess your employee's opinion of your company. It includes one intriguing question that gauges loyalty. An example of eNPS questions include: How likely are you to recommend our company to others? Employees respond to the eNPS survey on a scale of 1-10, where 10 denotes they are ‘highly likely’ to recommend the company and 1 signifies they are ‘highly unlikely’ to recommend it.

Based on the responses, employees can be placed in three different categories:

  • Promoters
    Employees who have responded positively or agreed.
  • Detractors
    Employees who have reacted negatively or disagreed.
  • Passives
    Employees who have stayed neutral with their responses.

How much is employee liability insurance?

The cost of employee liability insurance can vary widely depending on factors such as the size of the business, the industry, the coverage limits, deductible amounts, and the specific type of liability insurance purchased (e.g., EPLI, D&O, E&O). It's advisable for businesses to request quotes from insurance providers to get accurate pricing.

How to obtain employee liability insurance?

The way to obtain employee liability insurance includes:

  • Working with insurance brokers: Insurance brokers can help businesses assess their insurance needs, navigate policy options, and negotiate with insurance carriers to obtain the most suitable coverage.
  • Comparing quotes and coverage options: It's essential to shop around and compare quotes from different insurance providers to find the best coverage options at competitive rates.
  • Policy customization: Tailoring insurance policies to specific business needs and risks ensures comprehensive coverage and protection against potential liabilities.

By understanding these aspects of employee liability insurance, businesses can mitigate risks, protect their assets, and ensure financial security for both the company and its employees.

Does general liability insurance cover employee injury?

General liability insurance typically covers third-party bodily injury or property damage claims, such as those from customers or visitors. However, it may not cover injuries to employees. For coverage of employee injuries, businesses usually need workers' compensation insurance.

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