Employment agencies list job vacancies and refer or place applicants for employment with other firms. The referred or placed individuals are not employees of the employment agency.
Employment agencies face risks to their business property from fire, weather events, theft and other perils. In addition, like other professional services firms, employment agencies may be sued for professional negligence as well as third-party bodily injury and property damage claims.
If you own an employment agency, enlist the help of a local independent insurance agent who can work with highly rated insurance companies to find the right mix of coverage for your needs and budget.
Whether you rent or lease office space, you need employment agency insurance policies to protect you from the risks you face, including the following:
- Slips, falls and other injuries at your office
- Fire, smoke or weather events that cause property damage
- Lawsuits related to your professional services
- Cyber breach
Basic Business Insurance for Employment Agencies
Commercial general liability (CGL) insurance provides broad coverage for lawsuits that may be filed against your business. CGL insurance covers third-party bodily injury and property damage claims against your employment agency.
It helps you pay for direct costs related to a claim (e.g., medical expenses, and repairing or replacing damaged property), as well as your legal defense if you are sued.
Because you regularly have members of the general public (customers, vendors, delivery persons, cleaning crew) on your business premises, this coverage is essential.
A person who trips and falls at your office and is injured may sue you for damages. The CGL policy pays for attorney fees, court costs, and even settlements or court-ordered judgments.
Property insurance is also essential for employment agencies. Whether you own your building or lease your office space, you need some type of protection for your business property.
Commercial property insurance covers damage to a building and its contents (computers, office equipment and furniture, supplies, fixtures, etc.) if it is damaged by a weather event, fire, theft, vandalism and other causes of loss.
Most business property policies also offer coverage for business interruption, which helps you pay for ongoing expenses if you must temporarily close or relocate due to a covered property loss (e.g., a fire).
Certain small to medium-sized businesses are eligible for a business owners policy, or BOP. A BOP is a packaged policy that combines general liability, property and business interruption coverage at an affordable price.
Your independent insurance agent can help you determine if you can save money on your employment agency insurance by purchasing a business owners policy.
Professional Liability Insurance for Employment Agencies
Professional liability (or errors and omissions) insurance provides protection for you if a client sues you for negligence or other wrongdoing related to your work. Professional liability policies the following coverage:
- Actual or alleged errors
- Professional negligence
- Breach of duty
- Misleading statements
- Claims resulting from the performance — or nonperformance — of professional services
For an employment agency, this may mean failing to perform adequate background checks or recommending an employee who turns out to be unqualified for a position. Either of these scenarios could lead to a financial loss for your client — and a lawsuit for you.
Job applicants can sue you as well. Imagine that you fail to provide a job applicant with adequate notice before an interview and the interview does not reflect well on the applicant, eliminating him or her from consideration for the job.
The applicant may decide to sue you for negligent professional services. Whether or not the lawsuit has merit, you have to defend yourself. And a legal defense of any kind is costly.
Professional liability insurance covers your defense costs, including attorney fees and court costs, as well as settlements or judgments that you are required to pay. Insurance companies offer a variety of specialized policies that are customized for the particular risks faced by certain professionals, including employment agencies.
Cyber Liability Insurance for Employment Agencies
Your business likely handles a lot of confidential information for both employers and thousands of job applicants. What if that information were exposed due a breach of your computer network or website?
Imagine the ripple effect that such an event might have. How many businesses and individuals might be susceptible to identity theft or other financial losses?
Whether you are a multimillion-dollar company or the sole proprietor of a small employment agency, you are susceptible to a data breach that can destroy your livelihood.
Cyber liability refers to a range of potential liability exposures that can occur while using, storing or transferring data electronically for business purposes. The most common types of cyber threats that businesses face include the following:
- Failure to protect personal or corporate information, leading to unauthorized access of customer information and network or server interruptions
- Loss of income due to a breach or hack
- Personal injury claims (defamation, libel) stemming from your website, blog or social media accounts
- Business interruption and loss of income for a client or partner because of a hacker, security breach or power outage that affects your computer system, network or website
- Unknowing transmission of viruses or malware by email or internet
- Inadvertent copyright or trademark infringement
- Intellectual property claims
- Breach of privacy claims
Any business that handles electronic data — especially personally identifiable information about its customers — is particularly susceptible to cyber threats.
If you are sued because of a data breach or other cyber crime, your business is responsible for paying legal fees, court-ordered judgments or settlements, and other court costs. You may also incur numerous other costs related to the breach, including the following:
- Notifying your customers
- Providing credit monitoring services to customers at your expense
- Restoring you image (e.g., using public relations to restore your image)
While insurance companies have not yet developed standard forms for cyber liability insurance — many don’t even call it by the same name — some typical coverage areas are available to protect businesses from the most common and costly cyber liability claims:
- Coverage for legal defense, settlements and judgments
- Coverage for public relations expenses
- First-party coverage for damaged equipment, lost information and digital assets (immediate customer and business needs)
- Third-party coverage for customers, partners or others if you are sued for a data breach that was caused by your actions or negligence
Cyber liability coverage can be had by adding it to a business owners policy (BOP) or commercial general liability policy or by purchasing a customized, standalone solution. Work with your independent insurance agent to make sure it addresses the exposures you have.
Workers’ Compensation Insurance for Employment Agencies
Workers’ compensation insurance protects employees from work-related illnesses and injuries. It provides coverage for medical expenses as well as income replacement for an injured worker.
Workers’ compensation insurance is regulated by your state, and nearly every business that has employees is required to purchase it. It not only protects your employees if they are injured on the job but also protects your business from being sued by injured employees.
Employment agencies must provide workers’ compensation insurance for their in-house employees. You do not have to provide workers’ compensation insurance for any individuals that you place with other firms. Those individuals are not employed by you; they become employees of your clients after they are placed in a position.
Where to Find Tailored Employment Agency Insurance
Independent insurance agents can get you fast quotes for tailored business insurance. Our independent agents are not locked in to working with one insurance company, and they know that a one-size-fits-all approach is never best.
A local agent who will get to know you and who will be your trusted adviser for the long term can find you tailored coverage that address your unique business risks.
When comparing quotes from multiple, highly rated insurance companies, be sure you are using an apples-to-apples approach for evaluating the coverage being offered. One company may not offer the exact same coverage, limits or exclusions as the next — so don’t make your decision based on cost alone.
You may find the that less expensive proposal offers lower limits or inferior coverage, leaving you with unwanted gaps. Your independent agent can help you evaluate any quotes that you receive so that you can make the best choice for your needs and budget.
Contact a local independent agent today.