When to Notify Your EPLI Carrier – and When You Can Hold Off

Posted February 21, 2025

Author – Tom Schneider, Account Executive – Horst Insurance

Employment Practices Liability Insurance (EPLI) provides protection against claims related to workplace disputes. But knowing when to notify your carrier can mean the difference between full coverage and a denied claim. Here’s a clear breakdown to help you navigate this crucial decision.

Notify Your Carrier When:

  1. A Lawsuit or Formal Complaint Lands on Your Desk
    • If an employee files a lawsuit, EEOC charge, or any legal claim alleging discrimination, harassment, wrongful termination, or retaliation, your carrier needs to know—immediately.
  2. You Receive a Threat or Demand Letter
    • A letter from an employee (or their attorney) demanding compensation or threatening legal action is a major red flag. Many EPLI policies require notification at this stage, even if no lawsuit has been filed yet.
  3. An Internal Complaint Has the Potential to Escalate
    • Not every HR issue needs reporting, but if a serious claim—like workplace harassment or discrimination—is raised internally and could lead to legal trouble, err on the side of caution and notify your insurer.
  4. A Government Agency Opens an Investigation
    • If the EEOC, Department of Labor (DOL), or another agency starts digging into your employment practices, that’s a qualifying event for notification under many policies.
  5. You Enter Mediation or Settlement Talks
    • If you’re attempting to resolve a dispute through mediation or negotiations, your carrier may need to be involved—especially if a settlement is on the table.
  6. A Third-Party Claims Discrimination or Harassment
    • Some EPLI policies cover claims from non-employees, like customers or vendors, who accuse your company of workplace-related misconduct.

When You Might Not Need to Notify:

  1. Routine Employee Grievances
    • A worker expressing frustration over a performance review or a denied raise? That’s just another day at the office—no need to call your carrier.
  2. HR Disciplinary Actions Without Backlash
    • If you discipline or terminate an employee and they accept it without dispute, there’s likely no need to involve your insurer.
  3. Matters Clearly Excluded from Coverage
    • EPLI policies often exclude intentional misconduct, criminal acts, and violations of wage-and-hour laws. If the issue falls into an exclusion, reporting it won’t help.

Important Caveat: Some Policies Require Notice at the First Sign of Trouble

Certain EPLI policies have a “knowledge of a circumstance” clause, meaning if a manager or HR representative becomes aware of an incident that could lead to a claim, you must notify the carrier—even if no formal complaint has been made yet. Failing to do so could mean losing coverage later.

The Bottom Line:

When in doubt, check your policy and notify early rather than late. EPLI carriers can provide legal support, defense counsel, and guidance to prevent a small issue from snowballing into a costly lawsuit.

Still have questions regarding this topic?  Please be sure to reach out to the professionals at Horst Insurance.