When I meet a new client, they have often heard this term but don’t know exactly what it means. The “EPLI” acronym stands for Employment Practices Liability Insurance. It protects business owners against such issues as wrongful termination, failure to hire, discrimination, harassment, etc. In our office, we have seen an uptick in these claims in the last few years. This has accelerated after Covid.
A lot of times when new practice owners are closing on their office purchases, they are overwhelmed and it’s hard for them to decide on coverage. If you can’t decide how much to get before closing, I highly recommend that you do so at your earliest opportunity once you take over. The ownership transition period can be a time when staff issues pop up. I’ve seen this to be especially true when the buyer is different than the seller in personality, age, gender, etc., and can be enhanced if the staff has been with the owner for many years. Particularly in today’s hectic world, some people are not reacting well to change. I have also observed challenges when the seller kept the practice sale a secret from the staff and suddenly there is a new boss. Employees can find the sudden shift upsetting.
Long-time practice owners also need to watch out for this risk. We had a case recently in my office where an owner reached out on raising their EPLI coverage. They had picked the minimum amount at the time of practice purchase and never got around to raising it. They simultaneously contacted their carrier to report a claim for an employee issue. Once an incident has happened or you have been served with a lawsuit, you cannot go back and add coverage for that issue. Think of it like trying to buy Homeowners Insurance on a house that has already burned down.
If you own a practice, it is important to look at the amount of coverage you carry. If you do not have coverage, I would suggest reaching out to your agent to see what your options are at this time. The legal costs and jury awards (if the claim goes to trial) have been going up, and this is expected to continue. If you are getting ready to start up or purchase a practice for the first time, I recommend getting familiar with the topic ahead of your loan closing. That way it is easy for you to make a decision when the quotes become available.
Ms. Anjali Singh, a Certified Financial Planner™, has been working exclusively with health care providers for over 20 years. She has helped thousands of dentists over the years in various areas of insurance both for personal and business purposes. Ms. Singh has conducted training for her peers all over the country and is an instructor for Dental B-School. She can be reached at: firstname.lastname@example.org.
California Insurance License No. 0C43235 and No. 0K64894.
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