What insurance do you need to start a recruitment agency?

When placing permanent and temporary staff into new roles, recruitment agencies and consultancies are exposed to many risks.

This could include the negligent actions of a contract worker, a client who believes you mis-represented a candidate’s qualifications for a job placement or an employee who gets injured at work.

By having the right business insurance cover in place, recruitment agencies can protect themselves against these kinds of risks and the financial burden they can bring.

If you’re starting a recruitment agency or consultancy, it’s important to consider the insurance cover you might need before you begin working with your first client. If you do the research and get your policies in place right away, to the level of cover your business needs, you’ll be protected against unpredictable claims from the get-go.

In this article, we’ll take you through the types of insurance covers that are usually considered essential for recruitment agencies of all types of specialisms.

Professional Indemnity Insurance

Professional indemnity insurance, also known as PI insurance and professional liability insurance, is regarded as an essential policy for recruitment agencies and consultancies.

PI insurance protects your business if you or any of your staff have made a mistake or are found to have been negligent in professional services you have provided to a client.

This could include a mistake simply caused by human error in the work you have completed which has caused your client to have suffered a financial loss or damages.

This could include a referencing check on a candidate not being completed properly or your company accidentally sharing confidential client information.

To summarise, professional indemnity insurance will cover the following claims:

• a negligent act or error made during the course of your duties
• unintentional infringement of intellectual property rights
• loss of data or documents entrusted to you
• unintentional breach of confidence
• unintentional libel or slander
• dishonesty.

If a client does try to make a claim of this kind against you, professional indemnity insurance will cover any legal costs or expenses incurred as well as any damages or costs awarded.

It will also cover the cost of replacing or restoring any lost documents that you are responsible for, provide compensation for court attendance and protect you if you lose money or goods that you are responsible for.

Public Liability Insurance

Public liability insurance, also known as PL insurance, is another popular policy for recruitment agencies.

This type of cover will protect your company if a third party, like a member of the public, accidentally suffers an injury that is caused by you or one of your employees during the course of your business activities.

It will also cover your business if property damage is caused by you or your business operation.

To summarise, public liability insurance will cover claims made against your business for:

• injury to third parties
• damage to third party property
• libel, slander or defamation
• wrongful arrest, imprisonment or eviction of any person
• wrongful accusation of shoplifting
• trespass, nuisance or any interference with right of way, by foot, air or water.

Public liability insurance will cover any related legal fees, costs and expenses plus the costs of hospital treatment.

It’s important to note that public liability insurance will only cover third party claims and not those made by your own members of staff. For this, you would need employers’ liability insurance which is explained below.

Employers’ Liability Insurance

For recruitment agencies with one or more employees, employers’ liability insurance is a legal requirement under the Employers Liability Act (1969).

As an employer, you’re responsible for the health and safety of your employees while they’re working for you. This means that if one of your employees is injured or suffers a disease, loss or damages, as a result of the work they do for you, your business is responsible.

Employers’ liability insurance will cover the legal costs of defending this type of claim, if made against you by an employee or former employee. It will also cover the cost of compensation for your employee’s injuries or disease, medical costs, loss of income and any other damages.

Under the Employers Liability Act, employers must be insured with employers’ liability insurance for at least £5,000,000. Failing to hold employers’ liability insurance when you have employees is a criminal offence with fines issued of up to £2,500 a day.

General Contents Insurance

When you run a business, whether that’s from an office or from home, your office contents and equipment including your computers, laptops, printers, furniture such as desks, stationery and documents are all crucial to the job. If these things are stolen or if an accident such as fire occurs leaving them unusable, this could stop you and your team from being able to do your job.

These items, owned by the business, would not usually be covered under a household insurance policy, which is why general contents insurance can be of benefit to recruitment agencies.

General contents insurance, depending on your insurance policy, can cover your office equipment and contents for all risks, including but not limited to theft, fire, water damage from burst pipes and malicious damage.

Don’t forget that the value you should choose to be covered up to, in order not to be underinsured, is the new replacement cost of your items.

Portable Equipment

As a recruiter, your role might involve travelling to client meetings and working away from your own premises. When you’re commuting and working from a client’s premises, your equipment such as your laptop, mobile phone and any other hardware you might need is at risk of being stolen, lost or damaged.

Portable Equipment insurance covers these belongings when you’re working away from the office.

At Caunce O’Hara, public liability, employers’ liability, general contents insurance and portable equipment insurance can be bought as part of our Combined Liability and Office Insurance package.

Commercial crime insurance

With criminals using more and more sophisticated ways to defraud businesses of all kinds, commercial crime has become increasingly prevalent over the last decade.

The traditional crimes like theft, which are usually covered under a commercial crime policy, are being replaced by crimes that exploit the technology you rely on day-to-day, such as emails.

Typically, commercial crime insurance will cover financial losses your business suffers because of theft, robbery, fraud or an electronic crime.

An example of commercial crime could be you receiving a letter chasing an invoice and advising of new account details. The invoice details are correct and reflect the amount you are due to pay. You pay the invoice and it’s only when you are chased for payment a few weeks later that it becomes apparent that the new bank details were those of the fraudsters. In this scenario, a commercial crime insurance policy would cover your financial losses.

Another example could include you opening an email claiming to be from a courier service. Unbeknown to you, you have inadvertently loaded spyware onto your computer allowing a third party to track your key strokes. Logging into your bank account provides fraudsters with all they need to access your funds.

Commercial crime can be costly and can damage a business’s reputation which is why a lot of companies choose to protect themselves against these types of crimes.

What level of cover do I need?

The level of protection you need will depend on the value of the work you do and the potential liability.

Caunce O’Hara can help you build the ideal insurance policy that will help protect your business.

We offer specialist policies tailored for the recruitment industry and provide a level of protection to suit your requirements.

For a quick online quotation for your recruitment agency insurance, click the green button below, or give our award-winning team a call on 0333 321 1403.

CLICK HERE FOR A RECRUITMENT AGENCY INSURANCE QUOTE

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Author Katherine Ducie, Marketing Executive