Key Takeaways
- A wrap-around insurance program is designed to provide coverage for punitive damages resulting from employment practices liability claims.
- The program is known for ‘wrapping around’ an existing Employment Practices Liability Insurance (EPLI) policy.
- EPLI policies protect employers from financial losses not covered by workers’ compensation.
- Wrap-around insurance can also extend to health, life, and political risk insurance sectors.
Understanding a Wrap-Around Insurance Program
A wrap-around insurance program integrates seamlessly with an Employment Practices Liability Insurance (EPLI) policy. These policies protect employers from lawsuits alleging violations of employee rights. Such claims can arise from discrimination, harassment, wrongful termination, and more.
The primary compensation awarded in these cases often includes punitive monetary damages, meant to reimburse various needs like medical expenses, loss of income, and emotional suffering.
Employers obtain EPLI to shoulder the potential costs of legal action. Suppose an employee believes that workers’ compensation is insufficient, possibly due to employer negligence. In that case, they might take legal action against their employer for additional punitive damages covering pain and suffering.
Employment Practices Liability Insurance (EPLI) is pivotal in protecting this financial risk. It encompasses costs beyond the scope of workers’ compensation or general liability insurance, which primarily offers financial coverage for medical expenses and wages from job-related injuries or sickness. EPLI policies enforce specific limits on payouts per employee for each incident.
Types of Wrap-Around Insurance Programs
Wrap-around insurance isn’t limited to employee-employer relationships. Another prominent type involves secondary or ancillary insurance policies for health and life insurance when existing coverage doesn’t fully meet current or future needs.
Moreover, a specialized form of wrap-around insurance protects against political risk, ensuring that companies guard themselves against financial losses resulting from actions by foreign governments. This category of wrap-around insurance covers deprivation, government acts, embargo, sanctions, partial losses, and forced abandonment.
Special Considerations
Punitive cases fall under civil court jurisdiction, differing significantly from criminal cases. In civil court, there is a defendant but no prosecutor as seen in criminal trials.
The claimant typically seeks financial restitution and must hire legal counsel. In contrast, defendants in criminal proceedings can request state-provided legal representation if unable to afford one themselves. Civil trials focus solely on financial restoration without the prospects of imprisonment or conviction.
Most civil cases get resolved without a jury, with a judge solely presiding over the proceedings and verdict.
Related Terms: Employment Practices Liability Insurance (EPLI), punitive damages, employer insurance, health insurance, political risk insurance.
References
- U.S. International Development Finance Corporation. “Political Risk Insurance”.
- United States Courts. “Covering Civil Cases – Journalist’s Guide”.
