1. Forms
2. EP
3. EP-01-20

What the Form Is

The EP 01 20, titled "Liability to Non-Employees," is an endorsement to an Employment-Related Practices Liability (ERPL) insurance policy. Its primary purpose is to extend coverage to the insured entity for claims made by individuals who are not employees of the insured (i.e., third parties). This coverage specifically applies to alleged "wrongful acts," which under this endorsement are typically defined as discrimination or harassment perpetrated by an insured in the course of their work for the named insured. The act leading to the claim must be work-related.

Classes of Business It Applies To

This endorsement is relevant for a wide range of businesses that have regular and significant interactions with non-employees, which could potentially lead to claims of discrimination or harassment. Examples include:

• Companies that frequently use independent contractors or freelancers who work closely with their employees or on their premises.
• Businesses whose employees regularly visit client sites or interact with clients' employees (e.g., consulting firms, service providers).
• Retail or hospitality businesses where employees have extensive contact with customers and the general public.
• Organizations that host events or have vendors operating on their property.
• Healthcare providers whose staff interact with patients' families or other third-party caregivers.

For instance, if an employee of an insured company is alleged to have harassed a vendor's representative while that representative was on the insured's premises for business purposes, this endorsement could provide coverage for the ensuing claim against the insured company.

Special Considerations

Several important points should be considered when evaluating or using this endorsement:

• Limited Scope of Wrongful Acts: Coverage is typically restricted to claims alleging discrimination or harassment. Other types of wrongful acts committed against non-employees may not be covered by this specific endorsement.
• Work-Related Trigger: The alleged wrongful act must occur in the course of the insured's work for the named insured. Acts unrelated to the business's operations would likely not be covered.
• Definition of Non-Employee: It's crucial to understand how "non-employee" is defined in the context of the policy and this endorsement. This typically includes customers, clients, vendors, independent contractors, and other third parties.
• Underlying EPLI Policy: This endorsement modifies the base EPLI policy. The terms, conditions, exclusions, and limits of the underlying EPLI policy will still apply unless specifically amended by this endorsement.
• Risk Assessment: Businesses should carefully assess their actual exposure to third-party liability claims for discrimination and harassment to determine if this endorsement is necessary.

Key Information for Agents and Underwriters

Agents and underwriters should consider the following:

• Risk Profile: The nature and frequency of the insured's interactions with non-employees are key underwriting considerations. Businesses with high levels of public contact or reliance on contractors may present a higher risk.
• Preventative Measures: Underwriters will likely be interested in the insured's policies and training programs aimed at preventing discrimination and harassment, not just for employees but also in their interactions with third parties.
• Claims History: Any prior history of similar claims (whether from employees or non-employees) will be a significant factor in underwriting and pricing.
• Coverage Gaps: Agents should discuss this endorsement with clients who have significant third-party interaction to ensure they understand potential coverage gaps if this endorsement is not in place. The standard EPLI form may not cover claims from non-employees.
• Pricing: The premium for this endorsement will reflect the perceived increase in risk. Factors influencing price include the industry, size of the business, number of non-employee interactions, and the insured's risk management practices.
• Clarity of Coverage: Ensure the client understands that this endorsement is specific to liability to non-employees for certain wrongful acts (discrimination, harassment) and does not provide broad third-party liability coverage for all types of incidents.