The employment placement services you provide help companies fulfill their talent needs. This service saves them time, effort, and energy pursuing employees in-house. However, this work also comes with risks. Any number of things can go wrong.
For instance, your recruits may not show up for the job, even after being hired. Others may leave your business within six months of joining. Your client may sue you for negligent services, mistakes, or other losses to their companies. You may also be susceptible to common issues unrelated to the services provided. For instance, a client may get injured in your offices and want compensation for lost income, pain, suffering, or medical expenses.
Third-party lawsuits can be long and expensive. This is where employment agency insurance can help you reduce the financial risks of potential issues. Your firm can be protected from common and unique hazards of the profession. It can continue operations in the face of these challenges. Let's understand the potential risks and the essential types of insurance that can protect your business.
Potential Risks
Here are some examples of incidents that can disrupt smooth operations. They can also diminish the financial condition of employment agencies:
- Your client believes that your services are not up to the mark. They believe the benefits promised were not delivered. They are now suing your business for negligence. The company must pay for a legal defense, court fees, and potential settlements.
- Your company is a victim of a ransomware attack. There is a ransom demand from the hackers who hold the data hostage. Sensitive information will be lost or compromised if your company does not pay the ransom.
- A fire breaks out and destroys your office and all the property on the premises. Your operations are disrupted until you repair the building and replace the damaged property.
- One of your employees injures themself at the office. They must be taken to the hospital, followed by time off for recovery from their injuries.
- One of your business-owned vehicles meets with an accident en route to a client meeting. The at-fault driver has no insurance, your auto is totaled, and your employee is hurt.
All these events can take a toll on your company's reputation and finances. Business insurance for employment agencies is a must to sustain the business through challenging circumstances.
Types Of Employment Agency Insurance
Comprehensive staffing agency insurance covers various types of risk associated with the business. Here is a snapshot of multiple categories:
General Liability Insurance
This is the most basic type of insurance relevant to almost every business, including employment agencies. General liability insurance covers third-party lawsuits due to bodily injuries, damaged third-party property, and advertising injuries like slander and libel. This type of insurance provides defense costs and potential settlements.
Business Owner's Policy (BOP)
BOP is an important part of insurance coverage for an employment agency. It protects your company with two critical coverages: general liability and property insurance.
Property insurance covers your business assets that are damaged or lost due to fire, wind damage, vandalism, lightning, hail, theft, riot, civil commotion, and more. However, it does not cover damage or loss from earthquakes, floods, pollution damage, and wear and tear, to name a few exclusions.
The general liability coverage will provide legal counsel, pay for court costs, and settlements associated with third-party lawsuits for bodily harm, property damage, and personal or advertising injury for covered events.
Professional Liability Insurance
Errors & Omissions or Professional Liability insurance is essential to staffing company insurance. If a client sues the business for alleged malpractice, errors, or misrepresentation, it can be costly to defend these allegations, whether true or not. This policy will provide legal defense for covered events where your professional services cause a financial loss to a client or other third party.
Workers' Compensation Insurance
This type of insurance is relevant to your business's responsibilities to your staff. If an employee sustains injuries on the job, workers' compensation insurance covers the cost of hospitalization, prescriptions, and a portion of lost wages. This insurance also pays the statutory death benefit for the next of kin in case of fatalities. The included employers' liability coverage can help cover costs associated with third-party lawsuits filed by the injured employee's family.
Cyber Insurance
An employee placement agency stores a significant amount of confidential information. This information can comprise your company's, clients', and employees' personal information. All businesses are vulnerable to ransomware attacks, phishing emails, and even funds transfer fraud today. Cyber insurance can help cover the cost of notifying affected parties, data recovery costs, forensic investigation, hardware damage, and ransomware payments.
Commercial Auto Insurance
This type of insurance helps protect your business from financial losses incurred due to accidents associated with your company's vehicles. Commercial auto insurance covers several types of claims. These include liability to third parties for bodily injuries and property damage from your driver's at-fault accident. Comprehensive and collision coverage for the company cars, state-required coverage like No-Fault, Personal Injury Protection, or Uninsured Motorists can also be included.
Cost of Employee Agency Insurance
The cost of insurance coverage for an employment agency depends on various factors:
- The annual revenue of your staffing business, the number of placements per year
- Location
- The type of industries and job roles recruited for; for instance, senior management white-collar roles, medical staffing, construction
- Is your business open to the public?
- Annual payroll
- Business-owned asset values, number of vehicles, liability limits
Summing Up
Buying comprehensive employment agency insurance can help protect your company from the financial fallouts of third-party lawsuits, property damage, and data breaches, among other hazards.
It is the best alternative to paying out-of-pocket for loss expenses that can potentially bankrupt your business. Your company can partner with an experienced insurance agency like Insurance Advisor to get an agent that will provide the answers you need to make good decisions for your business's insurance needs. Request a quote at InsuranceAdvisor.com.
Visit the Insurance Advisor blog or our website, to know more.