What restriction may apply to third-party liability coverage under certain EPLI policies?

Third-party liability coverage under Employment Practices Liability Insurance (EPLI) policies often comes with specific limitations. One such restriction is that coverage may not apply to all types of third parties. This means that while some EPLI policies provide protection against claims made by third parties, they are not universally applicable to every conceivable third party involved.

For example, certain policies might only cover claims from specific groups, like customers or vendors, while excluding others, such as independent contractors or non-business-related individuals. The intention behind these restrictions is to target the coverage to relevant stakeholders that are more directly involved with the business’s employment practices, thereby limiting the insurer's exposure to broad liability.

Understanding this limitation is crucial for businesses that seek EPLI coverage, as it affects who can make a claim under the policy and under what circumstances. This distinction helps in ensuring that both employers and their insurers have clarity about the scope of protection provided under the policy.