1. Forms
2. EP
3. EP-00-02

What the Form Is

The EP 00 02, Employment-Related Practices Liability Coverage Form - Occurrence Basis, is a standard insurance form developed by the Insurance Services Office (ISO). Its primary purpose is to provide coverage for employers against claims alleging various employment-related 'wrongful acts'. A key distinguishing feature of the EP 00 02 is that it offers separate limits of insurance for defense expenses and for indemnity (damages/settlements), meaning that the costs of defending a claim do not erode the funds available to pay a settlement or judgment, and vice versa. This form is specified as providing coverage on an 'occurrence basis', which means it covers wrongful acts that take place during the policy period, irrespective of when the claim is actually filed (though subject to applicable statutes of limitation).

Classes of Business It Applies To

This coverage form is designed for a wide array of businesses, as any entity with employees is exposed to potential employment-related liabilities. It is suitable for small, medium, and large enterprises across various industries. Real-world examples of situations where this form would apply include claims alleging:

• Wrongful termination or constructive discharge
• Discrimination (e.g., based on age, gender, race, religion, disability, national origin, or other protected characteristics)
• Workplace harassment (e.g., sexual harassment, creation of a hostile work environment)
• Retaliation against employees for legally protected activities (e.g., whistleblowing)
• Wrongful failure to employ or promote
• Mismanagement of employee benefit plans (often subject to specific policy language and potential endorsements)
• Defamation, libel, slander, or invasion of privacy in an employment context

Special Considerations

• Separate Defense and Indemnity Limits: This is a significant feature. Unlike forms with combined single limits (like the EP 00 01), the EP 00 02 ensures that substantial legal defense costs will not deplete the coverage available for paying a judgment or settlement.
• Occurrence Trigger: The 'occurrence basis' trigger is a critical aspect. It means the policy in force at the time the wrongful act *occurred* is the policy that will respond to the claim. This can be advantageous for long-tail claims that may be reported years after the actual event. However, many Employment Practices Liability Insurance (EPLI) policies are written on a 'claims-made' basis (where the policy in effect when the claim is *first made* responds), so this distinction is vital. (Note: ISO form EP 00 01 is a claims-made form. )
• Definition of "Wrongful Act": The specific definition of what constitutes a 'wrongful act' is fundamental to the coverage provided and will be detailed within the policy form.
• Consent to Settle Clause: EPLI policies often include provisions regarding the insurer's ability to settle a claim, which may require the insured's consent. The related form EP 00 01 notes the insurer will not settle without the named insured's consent, a feature likely mirrored in EP 00 02.
• Exclusions: As with any insurance policy, there will be specific exclusions detailing situations or types of claims not covered (e.g., claims related to wage and hour disputes are commonly excluded or have limited coverage in standard EPLI forms).

Key Information for Agents and Underwriters

• Risk Assessment: Underwriters will thoroughly evaluate an applicant's risk profile. This includes reviewing their HR policies and procedures, employee handbooks, hiring and termination practices, history of employment-related claims or lawsuits, employee training programs (especially for harassment and discrimination prevention), industry sector, employee count, and geographic locations.
• Pricing/Rating: The provision of separate limits for defense and indemnity in the EP 00 02 may be a factor in its pricing compared to combined-limit forms. The occurrence trigger might also influence rating, given the potential for a longer reporting tail.
• Coverage Comparison: Agents should help clients understand the differences between this occurrence form and more common claims-made EPLI policies, particularly regarding how coverage is triggered and the implications for prior acts coverage or extended reporting periods.
• Tailoring Coverage: While a standard form, coverage can often be modified with endorsements to address specific client needs or industry exposures. Agents should explore available endorsements to fill potential coverage gaps.
• Importance of HR Practices: Strong human resources practices and loss prevention measures are key to mitigating EPLI risks and can positively impact underwriting and pricing.