The lawsuit nobody expects until it lands on their desk
Most small business owners think of EPLI as something big corporations buy. Then they get a wrongful termination claim from a former employee and discover the average defense cost runs $75,000 before a verdict or settlement. The policy covers a wider list than the name suggests: discrimination, harassment, retaliation, failure to promote, wrongful discipline, defamation related to a reference check, and more. It does not cover intentional criminal acts, but it does cover the cost of defending claims that turn out to be unfounded.
Employee count is the single biggest driver after state. Each employee adds statistical exposure, and companies with 15 or more employees become subject to federal employment law (Title VII, ADA, ADEA), which opens the door to EEOC complaints that can escalate into litigation. California, New York, New Jersey, and Washington have employment statutes that go significantly further than federal minimums, which is why the state multiplier matters here more than it does for most other policy types. For broader protection, consider pairing EPLI with a workers' compensation policy and a general liability policy.
By Jessica Martinez | Updated June 2026
Jessica covers small-business insurance and financial planning. Her work has appeared across several business and finance publications.