Business Insurance – What To Know About Your Insurance Before Laying Off Any Employees


In today’s tough economic times, many companies are being forced to cut back on expenses. For this reason, many companies are downsizing, which means laying off employees. The more layoffs there are, the more lawsuits former employees will be filing against their former employers. Therefore, if your company is in the position of possibly laying off any employees, you’ll want to make sure your insurance will cover any possible repercussions.

It isn’t any mystery that people get ticked off when they get let go, particularly if they feel that John Doe down the hall loafs on the job but yet got to keep his job. Perhaps the old adage should be changed to “There is nothing worse than an employee scorned.” If you lay off an employee, you potentially face a lawsuit for wrongful discharge, retaliatory discharge, sexual harassment or age, sex or gender discrimination. Therefore, in the event that your company is considering laying off any employees, it is a good idea to determine now whether you have coverage in the event that any employee was to make a claim against your business.

A lot of businesses have commercial general liability insurance, which generally covers “bodily injury,” “property damage” and “personal and advertising injury.” Basic liability policies usually do not cover claims against the insured for employment disputes. Therefore, you will want to be sure to read any liability policy you are considering purchasing to determine whether employment claims are covered. If there are not, which is generally the case, you will want to consider purchasing what is called employment practices liability insurance (“EPL”). EPL policies cover losses for an employment practices acts, such as discrimination, harassment, wrongful discharge or termination and defamation.

If your business may be in the situation where it will be laying off employees, be sure to read your liability policy carefully to determine whether claims made by employees would be covered. If not, you will want to consider shopping for liability insurance quotes for employment practices insurance.

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