Priyanka is the head of operations at a Bellevue software company that raised a Series B and went from 25 to 110 employees in twelve months, with engineers in six states. Nine months later, the company restructured one product team and laid off eleven people.
The CFO asked her to confirm the company's insurance was ready for whatever came next.
What she asked for
A check that the insurance program matched the company's current size.
What the review found
EPLI was still rated on 25 employees. The company's employment practices liability was part of a management liability package bought at the seed stage, with a $1 million limit shared across D&O and EPLI. Headcount had quadrupled and the limit had not changed.
A shared limit meant one claim could drain the other. An employment class action could exhaust the same limit that protects the board from investor claims.
Remote employees in six states. Employment laws differ by state, and some, including California, bring a higher volume of claims. The policy's application listed Washington only.
The layoff had not been reported. Many EPLI policies ask about reductions in force, and some require notice. Layoffs are the single most common trigger for discrimination and retaliation claims.
Cyber was thin for a company holding customer data. The company's SaaS product held customer data from enterprise clients, and its cyber liability limit had not grown with the customer base.
What we put in place
We separated the management liability program so that directors and officers and EPLI each have their own limits, with D&O sized for a Series B company and EPLI rated on the real headcount and every state where employees work. The EPLI includes wage and hour defense, third-party harassment coverage, and a lower retention for claims handled by the carrier's panel counsel.
We disclosed the reduction in force on the application, along with the severance agreements and releases the company used. Carriers treat a well-documented layoff far better than one they discover later.
We raised the cyber limit to match what enterprise customers were asking for in new contracts and added it to the renewal calendar for review every funding round.
Why it mattered
Four months after the layoff, a former engineer filed an age discrimination charge. The claim was reported to the new EPLI carrier, which appointed experienced employment counsel. Because the D&O and EPLI limits were separate, the claim did not touch the board's protection, which mattered when the company began raising its next round.
If your company is growing fast
- Update EPLI every time headcount or states change significantly
- Separate D&O and EPLI limits once you have an outside board
- Disclose layoffs and document releases; carriers care about both
- Review cyber limits with every funding round and enterprise contract
See how we work with technology companies, or get a free policy review.