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Are You Covered When a Customer Claims Harassment, Discrimination?

You probably never want to imagine that a customer would sue you or your business for discrimination or sexual harassment, but it does happen unfortunately.

Customers, vendors, clients or other non-employees may allege that one of your employees engaged in a wrongful act such as sexual harassment or discrimination (age, sex, race, disability, etc.).

“Businesses that deal directly with the public generally have more vulnerability to customer claims or third-party claims,” said Christie Lucas, vice president and business insurance product manager at Erie Insurance. “Given the very nature of their business, they have more exposure to these risks.”

Businesses that deal with the public routinely could include restaurants, retail stores, auto dealerships, contractors, hotels, religious institutions, schools, medical offices and real estate professionals, among others, Lucas said.

Are you covered?

The next question in your mind should be are you covered? Many business owners may not realize —or realize too late—that they have a gap in their insurance coverage.

Most standard Employment Practices Liability Insurance (EPLI) policies generally offer a measure of protection against lawsuits brought on by employees alleging wrongful acts (sexual harassment or discrimination) or wrongful termination. But EPLI generally does not cover you when a customer sues you for discrimination or sexual harassment.

What is third-party coverage?

To narrow the gap in coverage, you may want to add third-party EPLI coverage, which you can purchase and add to your policy as an endorsement. An insurance professional like an Erie Insurance agent can tell you more about the benefits of the coverage and cost.

In addition to checking on your insurance coverage, it’s equally important to do all you can to prevent third-party claims. Businesses should have harassment and discrimination policies in place and conduct employee training routinely. 

Erie Insurance customers have access to loss prevention resources from Hartford Steam Boiler, ERIE’s partner in offering this coverage. For example, you would have access to online resources such as model employee handbooks, policy checklists and a library of web-based training topics. A legal helpline is also available so you can connect with an experienced attorney to talk about specific issues and concerns. If a covered claim occurs, you’ll also have access to claims professionals and attorneys who have experience with these sensitive matters.1

1Coverage and associated services provided under an arrangement with The Hartford Steam Boiler Inspection and Insurance Company. 


ERIEĀ® insurance products and services are provided by one or more of the following insurers: Erie Insurance Exchange, Erie Insurance Company, Erie Insurance Property & Casualty Company, Flagship City Insurance Company and Erie Family Life Insurance Company (home offices: Erie, Pennsylvania) or Erie Insurance Company of New York (home office: Rochester, New York).  The companies within the Erie Insurance Group are not licensed to operate in all states. Refer to the company licensure and states of operation information.

The insurance products and rates, if applicable, described in this blog are in effect as of July 2022 and may be changed at any time. 

Insurance products are subject to terms, conditions and exclusions not described in this blog. The policy contains the specific details of the coverages, terms, conditions and exclusions. 

The insurance products and services described in this blog are not offered in all states.  ERIE life insurance and annuity products are not available in New York.  ERIE Medicare supplement products are not available in the District of Columbia or New York.  ERIE long term care products are not available in the District of Columbia and New York. 

Eligibility will be determined at the time of application based upon applicable underwriting guidelines and rules in effect at that time.

Your ERIE agent can offer you practical guidance and answer questions you may have before you buy.