Employment & Staffing Agency Insurance
Because of the work they do, employment agencies have a lot of potential liabilities. Connecting employers with employees means a staffing agency has obligations to both parties. If something goes wrong, the blame and financial responsibility might fall on you.
Let's take a look at some employment agency insurance policies that can help address your most pressing risks.
General Liability Insurance
General Liability Insurance is usually the first policy most businesses buy, and for good reason. It covers many of the basic liability issues that crop up while doing business. For example, can help cover lawsuit costs when your agency is responsible for:
- Third-party injuries, such as a job candidate's slip-and-fall accident at your office.
- Third-party property damage, such as when a temp drops a client's laptop.
- Advertising injuries, such as using a copyrighted photo on your agency's website without permission.
Even if these incidents don't lead to lawsuits, your policy can help resolve the issue quickly. For example, if someone who doesn't work for your agency is hurt at your office, General Liability can usually pay for their immediate medical expenses. This financial flexibility may help you control a situation before it grows into a lawsuit. Plus, this policy won't set you back much. Staffing agencies typically pay around $35 a month for this coverage.
Business Owner's Policy
A Business Owner's Policy (BOP) combines General Liability Insurance with Commercial Property Insurance. This is a convenient way to purchase affordable staffing agency insurance because bundled policies are usually offered at a discounted rate.
In addition to the protection General Liability provides, the Commercial Property Insurance portion of your BOP can cover your office building (if you own it) and business property when it's damaged by:
Note: Most BOPs don't offer coverage for flood or hurricane damage. Talk to an agent about your property protection options if you live in an area where these events are a big risk.
Professional Liability Insurance
Professional Liability Insurance, also known as Errors & Omissions Insurance, is another key policy for employment agencies. It can help out when a client accuses you of making a professional mistake.
As the owner of a staffing agency, you are most likely to face a professional liability lawsuit if a client thinks you…
- Placed an employee who doesn't have the necessary skills to do the job.
- Didn't fulfill your side of a contract to fill open positions by an agreed upon deadline.
- Didn't comply with industry regulations other staffing agencies would've known to uphold.
For example, let's say you recommend an employee for an accounting firm. The employee exaggerated their skills on their resume, and now they've made an accounting mistake that is going to costs the firm a lot of money. The client sues your business for failing to properly vet the employee. In a case like this, Professional Liability Insurance may help pay for your legal bills.
Workers' Compensation Insurance
Most states require employment agencies to carry Workers' Compensation Insurance once they have employees. However, each state has its own rules, so your coverage obligations depend on where your agency is. This policy can help pay for employee medical expenses and replacement wages when they suffer work injuries.
However, Workers' Comp for temporary staffing agencies is tricky. Your state might consider your temps to be employees of your agency rather than the businesses you place them in. For example, say a receptionist you placed gets hurt at work. The liability for that injury may belong to your staffing agency, not the business where they were working at the time, because you might technically be considered their employer.
It can get a little confusing, which is why you should talk to your insurance agent to first determine if you need Workers' Comp coverage for temps, and if so, how much.