Once you have employees, Employment Practices Liability Insurance (EPLI) moves from optional to sensible, and most firms buy it between five and twenty staff. Employment practices liability covers wrongful termination, discrimination, and harassment claims, and it is the defense costs that make it worth buying. Wage and hour claims are usually excluded. Who this is for: Marketing and advertising agencies with employees, or about to have them.
The short version
- Employment Practices Liability Insurance covers employment claims and, critically, the defense costs that dominate them.
- Wage and hour exposure is usually excluded or capped at a small sublimit.
- Expect $500 to $3,500 a year for firms under twenty employees.
- Third party coverage extends employment Practices Liability Insurance to claims by clients and vendors, which matters for staff working on site.
- A current handbook and documented performance management do more to prevent claims than any policy.
What Does employment Practices Liability Insurance Cover?
- Wrongful termination, discrimination, and harassment claims by employees or former employees.
- Retaliation, failure to promote, and hostile work environment allegations.
- Defense costs, which are the bulk of the spend on most employment claims.
- Claims by applicants and, on some forms, by third parties such as clients or vendors.
What it does not cover is wage and hour liability. Unpaid overtime and misclassification claims are usually excluded or capped at a small defense only sublimit, and for marketing and advertising agencies that is a real exposure given freelancer misclassification and unpaid interns.
When it becomes worth buying
| Headcount | Typical stance | Typical annual premium |
|---|---|---|
| 1 to 4 employees | Optional, often bundled cheaply with a package policy | $500 to $1,200 |
| 5 to 20 employees | Recommended for most firms | $1,200 to $3,500 |
| 20 to 100 employees | Standard, with limits of $1M or more | $3,500 to $12,000 |
| Any headcount in a high litigation state | Buy earlier | Add 20 to 40 percent |
The economics are simple. Defending a single discrimination charge through to a modest settlement commonly costs $35,000 to $150,000. A few thousand dollars of annual premium buys defense from the first demand letter, which is where these cases are cheapest to resolve.
The agency specific angle
For marketing and advertising agencies, the exposures that show up most are freelancer misclassification and unpaid interns. Add to that the ordinary risks every employer has: a termination handled badly, a promotion that looks like a pattern, or a manager who put something in writing that reads terribly a year later.
What actually reduces claims
- A current handbook that has been reviewed against the laws of every state where you have employees.
- Documented performance management, so a termination has a paper trail.
- Manager training on interviewing, accommodation requests, and complaints.
- A written complaint process that someone other than the accused person handles.
- A quick call to counsel before any termination that could look retaliatory.
What this looks like in practice
Illustrative example. Numbers are typical of claims we see and are not a promise of how any specific claim would be handled.
The setup: A agency with eleven employees and no employment Practices Liability Insurance when a former employee filed a discrimination charge.
The claim: The matter started with a stock image licensed for web use that ran on outdoor billboards. The rights holder demanded $85,000 in statutory damages and fees.
The cost: $22,000 in defense costs and $78,000 in settlement, $100,000 in total, paid inside the policy limit after the retention.
The lesson: Defense costs ran well into five figures before any settlement discussion started. A policy costing a small fraction of that would have funded counsel from the first letter.
Frequently asked questions
Q: Does a agency need employment Practices Liability Insurance?
Once you have employees, yes, and most firms buy it somewhere between the fifth and twentieth hire. Defense costs on a single employment claim usually exceed several years of premium.
Q: What does employment Practices Liability Insurance cover?
Wrongful termination, discrimination, harassment, retaliation, and related employment claims, including the defense costs that make up most of the spend.
Q: Does employment Practices Liability Insurance cover unpaid overtime claims?
Usually not. Wage and hour claims are typically excluded or limited to a small defense only sublimit. If misclassification is a live risk for you, ask about a wage and hour sublimit specifically.
Q: How much does employment Practices Liability Insurance cost?
Roughly $500 to $1,200 a year for a very small firm and $1,200 to $3,500 for a firm with five to twenty employees, with more in high litigation states.
Q: Can I add it to an existing policy?
Often yes. Many business owners policies and package policies offer an employment Practices Liability Insurance endorsement, though standalone policies usually have broader wording and higher limits.
Q: Are claims by non-employees covered?
Only if you add third party coverage, which extends to harassment or discrimination claims brought by clients and vendors. It is worth adding for firms whose staff work at client sites.
How Morrow helps marketing and advertising agencies
Morrow is a licensed independent commercial insurance brokerage that specializes in marketing & advertising agencies. Deciding when employment Practices Liability Insurance belongs in your program is exactly the kind of question we answer every week, and because we place this coverage every day we know which carriers write it well, which forms are broad, and which contract language actually needs an endorsement behind it.
- We read the contract clause and tell you what your current policy already does and does not do.
- We market your account to carriers that have real appetite for marketing and advertising agencies rather than whoever answers first.
- We issue certificates the same day a client asks, with the endorsements listed correctly.
- We stay on the file at renewal so limits, retroactive dates, and contract requirements do not quietly drift.
Get in touch and we will see how we can help. Tell us what you do, send over any contract that is driving the requirement, and send us the question and we will tell you where you stand. Start at morrowinsure.com or reach the team through the contact options on that page.
One more thing. This article is general information for marketing and advertising agencies and is not legal advice, tax advice, or a statement of coverage. Policy wording controls in every case, and forms vary by carrier and by state. Have a licensed advisor review your own policy and your own contract before you rely on any of it.
Last updated: Reviewed by the Morrow commercial lines team. Last updated August 2026.