You're Sued! If you have employees, you need EPL coverage.

The statistics should alarm you: Every year, between 77,000 and 81,000 charges are filed against employers under statutes enforced by the Equal Employment Opportunity Commission, and more than half of those claims are brought against companies with fewer than 100 employees--companies that are rarely prepared to deal with such actions.

No matter how happy you think your workers are, if you have employees, you have a risk, says Jeffrey O'Shaughnessy, assistant vice president of business and new product development with The Hartford Steam Boiler Inspection and Insurance Co.in Hartford, Connecticut. "Even in cases where it's all family, we have seen some very ugly disputes," he says. And even if the claim isn't valid, you still have to respond to it. About three-quarters of all claims are ultimately found to be groundless or fraudulent, but defense costs [for a single charge] can easily be $50,000."

The solution is Employment Practices Liability insurance, which, says O'Shaughnessy, "provides coverage for charges or allegations of sexual harassment, wrongful termination and discrimination when those allegations are brought by an employee against his or her employer." The coverage includes defense costs and payment of settlements and/or judgments up to the policy's limits.