You may be wondering, "Do employment agencies have to offer health insurance?" An employment agency works with a wide range of businesses and prospective employees. With all these people involved, it is easy for mistakes to happen or feelings to get hurt.
If you want to avoid problematic lawsuits, you need insurance that protects you from disgruntled people. Check out our guide to find out the answer to "What insurance does an employment agency need?"
Professional recruitment agencies work hard to pair potential employees with companies offering jobs. They can work on every level, assisting with hiring executives or part-time workers. However, sometimes this can come with risks. There are all sorts of ways in which recommending an employee can go wrong.
Anytime something goes wrong in the business world, there is the risk of lawsuits. An unhappy client could sue you, asking you to compensate them for lost wages, lost revenue, or general pain and suffering.
If you lose this lawsuit in court, you could owe hundreds of thousands of dollars. One unfortunate lawsuit outcome could end up bankrupting your company. Read on to learn more about options for professional liability insurance.
Here are eight classic examples of why you might end up needing insurance:
An employee lies about their background, and it turns out they do not have the qualifications to work for the business.
You get a client hired by a company, but then the new employee is harassed by fellow coworkers.
An employee you recommended makes a mistake and costs the company a lot of money in revenue.
While meeting at your office, a prospective client slips and injures their back.
You facilitate a hiring process, but then it turns out you forgot the employee signed a non-compete clause that keeps the person from working for the new company.
When holding an interview, you accidentally mention proprietary information to a person who has not yet signed an NDA. The person then uses this information to harm your clients.
You help a person find a job, but their employer ends up not paying the person as much as you promised they would.
You fail to get enough qualified candidates for a company in time, leading to an employee shortage that harms their business.
For these or other situations, the right insurance makes a big difference. Coverage helps pay for major lawsuits and legal expenses, so you can save money and keep your business running.
In some cases, employment insurance is more than just a smart idea. It might be a legal requirement for you to work. Federal laws mandate that companies have certain types of insurance if they have employees or work with other people.
State and local laws may have even more requirements. To legally operate your business without issues, you may need to obtain the proper insurance.
Employment agencies can work in a variety of industries. Some may work for job seekers, while others work with businesses who want to hire more people. Regardless of the type of agency you have, there are a few key insurance types you need to get.
Professional liability insurance is also known as errors and omissions insurance. This insurance is one of the most important types of coverage an employment agency can have.
It protects you in case someone tries to sue you for unsatisfactory performance. You can use it to cover lawsuits relating to things like:
If you are running a business, it might be a good idea to look into business owner's policies. These are essentially a type of insurance bundle.
In addition to providing you with professional liability insurance, business owner's policies can give coverage for commercial properties and general public liability. This policy can cover:
• Customers who are injured in your office • Damage to your building • Lost wages due to business interruptions • Damage to your equipment or supplies
Since most employment agencies work online and use a lot of data for hiring, it can be helpful to get a cyber liability insurance policy that covers electronic matters. This sort of additional staffing agency insurance covers a variety of issues related to cyberattacks or data breaches. Some common types of coverage include:
This type of insurance is essentially a liability insurance that specifically covers employees who get injured on the job.
In most cases, employment agencies are legally required to have workers' compensation for staffing agencies. Obtaining this insurance gives you coverage for:
The amount of coverage for your employment agency insurance is essentially how much the policy will pay if you run into problems. More coverage gives you extra protection, but of course you don't want to pay extra for coverage you won't use.
When considering coverage, there are two things you need to look into:
The first and most important thing to look at is the policy limit. Most business insurance policies do not provide you with an unlimited amount of coverage. Instead, they will cover expenses up to a certain amount.
Some policies may have a limit on the amount they pay for each claim, while others might limit the total amount they will pay in a year. Most people get a policy with a limit of around $1 million to $2 million, but you can find larger or smaller limits.
To pick your limit, you'll need to consider your business. Do you work with high-profile companies that handle expensive business? A mistake with one of these clients could cost millions.
Meanwhile, if you are a freelance recruiter working with small businesses that don't make a lot of money, you can get a smaller limit.
Other things to consider include the number of employees you have, the frequency of liability claims, and how many clients you work with.
A deductible is the amount of money you have to pay out of pocket before your insurance kicks in. For example, if you had a deductible of $5,000 and lost a lawsuit for $50,000, you would pay $5,000, and your insurance company would pay the remaining $45,000.
The deductible for typical policies can be anywhere from $1,000 to $25,000.
To find the right deductible level for you, think about how much you can realistically afford to pay. If you just want coverage in case of a major lawsuit and can comfortably pay a smaller settlement yourself, a high-deductible policy can work.
However, if you're operating on tight margins and even a few unexpected small lawsuits could bankrupt you, you'll need a policy with a lower deductible.
Staffing agency insurance costs will vary quite a bit depending on what sort of insurance you get. You typically pay more if you pick a policy with a high coverage limit and a low deductible.
Insurance companies may also require you to pay more if you have a large business, work with many expensive clients, or have made a lot of liability claims in the past.
The good news is that insurance costs are generally quite affordable. On average, most people pay somewhere between $400 to $800 per year for insurance.
This means you can get millions of dollars' worth of protection for just a few hundred dollars.
If you would like to find affordable, high quality business insurance, CoverWallet can help. With our policies, you can protect yourself from unforeseen issues.
Our team is happy to discuss your employment agency needs and help find a customized insurance plan for your situation. Call us today or visit us online to make a phone appointment with one of our experts.