Claims-Made Policy
Coverage that only responds to claims made during the active policy period — not when the incident occurred.
Read definitionRetroactive Date
The earliest date of a wrongful act the EPLI policy will cover, even if the claim arrives later.
Read definitionContinuity Date
The start date of your uninterrupted EPLI coverage history — critical when switching carriers.
Read definitionHammer Clause
A provision capping carrier liability when you reject a recommended settlement offer.
Read definitionDefense Within Limits
Defense costs reduce (erode) the policy limit available for judgments and settlements.
Read definitionThird-Party Coverage
Extends EPLI to cover claims by non-employees such as customers, clients, or vendors.
Read definitionWage and Hour Exclusion
The standard exclusion for wage, overtime, and labor code violation claims under EPLI policies.
Read definitionEEOC Charge
A formal complaint filed with the Equal Employment Opportunity Commission — often the first step before a lawsuit.
Read definitionSurplus Lines
Insurance placed with a non-admitted carrier for employment risks standard markets decline to write.
Read definitionAdmitted vs Non-Admitted
The key difference between state-licensed carriers and surplus-lines carriers, and what it means for your protection.
Read definitionWhy EPLI Terminology Matters
EPLI policies are among the more technically dense insurance products a small or mid-size employer will purchase. The policy form governs what is covered and what is not — and the terms that define that boundary matter enormously in practice. Knowing the difference between a claims-made and occurrence policy, for example, changes how you manage renewals and carrier transitions. Understanding what a retroactive date is helps you evaluate whether a lower-premium quote actually provides the same protection as your current policy.
Three provisions in particular tend to have the greatest impact when an actual claim arises: the claims-made structure (which determines whether your active policy at the time of the claim responds), the defense-within-limits provision (which affects how much of your coverage limit remains available after legal fees), and the hammer clause (which can shift financial exposure to you if you decline a settlement the carrier recommends). These are not fine-print technicalities — they are the terms that determine whether your policy pays what you expect it to pay.
EPLI policy language varies by carrier and form. The definitions in this glossary are written to be generally accurate across the market, but specific policy terms, conditions, and exclusions will differ. Use these definitions to ask better questions when comparing proposals, and always review the actual policy language and consult a licensed advisor before binding coverage.