Executive search services provide search, recruitment and placement services for clients in need of executives and senior management personnel with very specific characteristics. These firms may develop the search strategy and even the position requirements based on their knowledge of the client and its culture.
Executive search firms may research, identify, screen and interview candidates. They may also verify candidate qualifications, help with employment offers and negotiators, and may even help with the onboarding process for placed executives.
Corporations that hire executive search firms place a great deal of trust in their professionalism and expertise. Hiring an executive is a costly and critical process for any company.
Your clients want the search process to be successful and worth the expense. Unfortunately, there are many ways in which the placement process can go wrong, and all parties can hold you accountable.
You need tailored business insurance policies to ensure that you can weather the storm of any claims against you, whether or not the claims have merit. Without comprehensive insurance coverage, your entire livelihood could be at risk.
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Executive recruiters are hired for their expertise in finding and hiring the best people for their clients. If something goes wrong, you can be sued for professional negligence by an employer or even by an individual candidate. Consider the following:
- A candidate’s credentials are sent to his or her current employer rather than to a prospective employer, alerting the current employer to the candidate’s job search.
- You fail to perform a proper screening and a client company discovers that it has hired a top executive who is unqualified for the position.
Executive search firms can be sued based on erroneous advice given, errors in services provided, professional negligence or omissions that cause a client to lose money.
Professional liability insurance protects professionals, their partners, their employees, and the partnership or corporation from damages caused by failing to provide professional services. It is needed for these types of claims in order to pay defense costs, as well as any settlements or judgments rendered against you.
Because of the wide variation in the types of businesses or professions that need this coverage, there is neither standard policy language nor a one-size-fits-all solution. Your executive search professional liability policy should reflect your needs and address the unique exposures you face.
Property and Liability Coverage for Executive Search Firms
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., cost of medical expenses, cost to repair or replace 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. If someone trips and falls at your office and is injured, that party may sue you for damages. The CGL policy pays for attorney fees, court costs, and even settlements or court-ordered judgments.
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).
Other Important Coverage Options
Talk to your independent insurance agent about your need for the following types of insurance for your executive search firm. Some may be purchased as standalone policies while others can be added as endorsements to a basic business liability or property policy.
- Computers and media coverage — also called electronic data processing (EDP) insurance — pays for lost data and related lost income if your computers or network are damaged by theft, vandalism, viruses or malware. It may pay for loss of data or software, and physical damage to computers or hardware.
- Cyber liability insurance provides coverage in the event of a data breach involving your business. It helps pay for the costs of notifying affected clients, as well as the costs of public relations campaigns and the cost of investigations.
- Business auto insurance covers any vehicles your company owns. It provides liability coverage if you or an employee injures someone or causes property damage while driving a company vehicle. If your employees drive personal vehicles for business purposes, you must have nonowned or hired auto liability coverage to protect your company from accident-related costs.
- Workers’ compensation insurance is typically required for any business that has employees, and pays for lost income and medical expenses for employees that are injured on the job.
- Employment practices liability insurance provides coverage for violations of antidiscrimination regulations. It protects a business owner if a prospective, current or former employee sues based on discriminatory employment practices.
- Directors and officers (D&O) liability insurance provides protection for directors and officers of companies, against legal judgments and costs arising from wrongful acts, erroneous investment decisions, failure to maintain property, release of confidential information, hiring and firing decisions, conflicts of interest, gross negligence and errors of many other types. It is recommended for directors and officers who are accountable to investors, shareholders, creditors, employees and customers.
- Excess liability coverage, or commercial umbrella coverage, provides liability protection above and beyond the liability coverage included in a commercial general liability and a business auto policy. A commercial umbrella policy pays when your other liability coverage has been exhausted.
How to Find the Best Coverage for Your Executive Search Firm
To find the best business insurance policies that meet your budget, you need to obtain a variety of quotes from different insurance companies and choose the combination of coverage and price that will best address your risks.
When comparing quotes, be sure that you are comparing equal coverage. If one quote is significantly less than another, be sure you are using an apples-to-apples approach.
In addition, the best way to ensure that your needs are met is to engage with a trusted, independent insurance agent who can act as your adviser so you can get back to running your business.
Contact a local independent agent today.