The purpose of third-party coverage in an Employment Practices Liability (EPLI) policy is to protect an organization and its employees from accusations of wrongful acts committed against customers, clients, vendors, and suppliers. Some EPLI policies also cover wrongful acts committed by third parties against the insured's employees.
Employees who sue their employers for discrimination, denial of workers’ compensation benefits, or unfair employment practices can harm a company, not only economically, but its reputation as an employer and a corporate citizen. One method being used more often by businesses to reduce employee lawsuits is preemployment testing. Implementing this process correctly can result in hiring employees who are not only best suited for the job, but by reducing employee lawsuits, you could lower the cost of your employment practices liability insurance.