EPLI Products and Third-Party Coverage
Employment Practices Liability Insurance is still a relatively new product. The first widespread offerings were introduced in the early 1990’s. Package policy based EPLI coverage has been available for less than half that time.
EPLI coverage differs significantly from the rest of the coverage provided by a package policy in many ways, not the least of which typically involves claims made and reported coverage with the cost of defense expenses eroding coverage limits. Another significant difference is that, while CPP coverage has become very standardized, EPLI coverage offerings are all over the map.
One recent EPLI coverage extension is coverage for claims brought by third parties. My personal opinion is that this coverage has no connection to coverage for “employment” practices liability. But, this coverage has become an industry offering. And we support such offerings, albeit with a message that there is neither data to support rate development nor any set list of potential third party exposures.
Most package carriers that are considering whether to include “third party” coverage in their EPLI offerings are responding to market agitation for the coverage. Such carriers are interested in meeting market demand. But they are reluctant to be in a market leader position.
On first blush, it’s not hard to imagine the potential for discrimination of potential customers of restaurants and high end retail stores. In fact, insurers of restaurants and hotels have offered customer discrimination coverage for years. As we have considered the coverage, we have also imagined discrimination claims arising out of the denial of credit by lenders, including retail stores, and the denial of the opportunity to buy, lease or rent both residential and commercial property.
Another area that has received attention is reasonable access to Internet-based sales. A number of companies, including Target in 2007, have been sued by groups for failing to comply with the rules of the Americans With Disability Act (ADA). There are also companies, Amazon, for example, that are working with advocacy groups to develop means to create such access.
A new case offers a potential twist on this exposure. Most people know about Netflix’s subscription DVD delivery service. It was big news in 2011 as Netflix considered a shift towards Internet-based subscription video streaming services. About the same time, the National Association for the Deaf sued Netflix for failing to provide equal access to their “Watch Instantly” streaming site, in the form of closed-captioning (case 11-CV-30168-MAP).In a motion for judgment, Netflix posited that, while the ADA requires a company to provide reasonable accommodations, the duty to do so was limited to stores and other physical structures. Netflix also posited that they were protected by an FCC rule requiring closed captioning beginning only in 2014. In June of this year, a U.S. District Court disagreed, saying the law prohibits discrimination in any venue, including the Internet. The judge also noted that the FCC timelines were minimum standards that didn’t preclude a court mandating an earlier, ADA-based accessibility response.
The bottom line is that the intent of the ADA is intended to apply to evolving forms of technology. According to the Harvard Journal of Law & Technology, “Under Judge Ponsor’s reading, nearly all websites could be required to provide features for improved access by people with disabilities.”
It’s unlikely that either Amazon or Netflix is buying their liability coverage via a basic package policy. But it’s likely that many package policy insureds are now using the Internet in their business. Carriers thinking about adding third party coverage to their EPLI products should consider such potential exposures when building their forms and rates.