Third-Party Employment Practices Liability Coverage — a separate insuring agreement contained within employment practices liability insurance (EPLI) policies that covers liability claims brought by nonemployees (typically, customers, clients, and vendors) against employees of the insured organization.

Third-party employment practices liability coverage is needed because coverage for claims by nonemployees is not provided under commercial general liability (CGL) policies. This is because CGL policies exclude coverage for harassment and discrimination—the two causes of action most likely to be alleged in claims by third parties.

Third-party employment practices liability coverage is most often provided under Insuring Agreement B within EPLI policy forms and is subject to a limit that is separate from the limit applicable to Insuring Agreement A (which covers "traditional" employment practices liability claims brought by employees against the insured company and/or other employees). On the other hand, a substantial minority of insurers offers third-party employment practices liability coverage by means of a separate endorsement, whose limit is included within Insuring Agreement A of the policy.

A firm's exposure to third-party liability claims is driven largely by the extent to which its operations involve contact with the public. For example, an airline, which engages in frequent, intensive customer contact, has a much greater exposure to third-party claims compared to a firm that manufactures aircraft engines for sale to a handful of large industrial customers. Such differences are reflected in the rates insurers charge for third-party employment practices liability coverage.