Rush Nigut brings this up in his post Insurance for Employee Lawsuits: Don't Forget to Check Coverage.
So are you insured? Can you afford not to be?I think many small businesses are under the mistaken believe that they are covered for employment lawsuits through their ordinary business liability coverage. This is usually not the case. You will need to purchase a specific policy relating to employer practices in order to be covered. In addition, employer practices liability insurance policies vary greatly so be sure to carefully review the covered items with your insurance agent and lawyer. Find a policy that provides comprehensive coverage.