Recruitment agencies will contend with many of the same risks as any other business in any other sector. But there are also a number of risks that may be more pronounced or pressing for recruitment agencies.
In this post we will explore the various risks your recruitment agency may face, along with the insurance products that will help you manage and mitigate these risks.
Key Risks For Recruitment Agencies
While recruitment agencies face the same risks as any other business, they also face a very specific set of risks relating to the work they do, including:
- If an organisation is dissatisfied with an employee you supply, they may make a claim against you on the grounds of negligence, or errors and omissions.
- An individual could make a similar claim against you, if they feel you misrepresented a position in a listing or an interview.
- You could also face a negligence claim if you accidentally share confidential client information, either with organisations who are looking for employees, or applicants who are looking for work.
- While visiting your premises, a client may slip, trip, or fall, resulting in injury, or damage to their property. Or you may accidentally damage a client’s property when visiting their Either situation could result in a compensation claim against you.
- Cybercriminals may target your business data, either stealing and leaking it outright, or else encrypting it as part of a ransomware attack. As well as the costs associated with data loss and recovery, such a cyberattack could also result in considerable reputational damage.
What Insurance Cover Does a Recruitment Agency need?
There are a number of different types of insurance that recruitment agencies either legally need or would significantly benefit from, including:
- Professional indemnity insurance
- Employer’s liability insurance
- Public liability insurance
- Business contents and premises insurance
- Cyber insurance
- Commercial crime insurance
Below we will explore each of these insurance products with more information and the types of claims they can cover you for.
Professional Indemnity Insurance
Professional indemnity insurance may also be referred to as professional liability insurance. This is cover for any mistakes you or your staff may make in your work, along with any allegations that you may have acted negligently or dishonestly.
As well as covering any financial losses a client may experience as a result of an error, your professional indemnity insurance can also cover your legal fees, along with any financial losses you may incur yourself, such as those associated with lost documents.
Here are some of the claims for which a professional indemnity insurance policy can provide essential cover:
- Negligence or errors and omissions – such as forgetting to perform or complete a reference check on a candidate, or accidently sharing confidential information.
- Unintentional intellectual property infringement – such as a claim that your company logo resembles an existing trademark or copyright.
- Loss of data or documents – such as if an employee accidentally leaves a laptop on a bus or a train.
- Allegations of dishonesty – such as if a candidate asserts that you misrepresented a role, or if an organisation asserts that you misrepresented a candidate.
Employer’s Liability Insurance
This is one insurance product that you are legally required to have in place. Under the Employer’s Liability Act (1969), if you employ any staff, then you have a legal duty to get insurance for any illnesses, injuries, or other losses or damages an employee may sustain as a result of working for you.
Public Liability Insurance
While employer’s liability insurance can cover your staff for illnesses, injuries, and other damages, public liability insurance can provide similar cover for members of the public. This might include candidates, clients, contractors, delivery drivers, and anyone else who may visit your premises.
As well as covering incidents that occur on your premises, public liability insurance can also cover any losses or damages that you or your employees cause when visiting clients. For example, if you spill a cup of coffee over a client’s computer while meeting them, your public liability insurance can cover the cost of replacing or repairing the device.
Business Contents and Premises Insurance
Business premises insurance can cover your agency’s premises for any loss or damage experienced as a result of fires, floods, break-ins, or other insured events. Meanwhile, contents insurance can cover your equipment for loss or theft, including all of your devices, along with your office furniture, fixtures, and fittings.
Some contents insurance policies will even cover your devices when they are lost or damaged outside of the office.
You should also consider business interruption insurance. If an unexpected event, such as a fire or a flood, ever prevents you from operating your recruitment agency, business interruption insurance can cover your overheads for as long as it takes you and your employees to recover from the setback.
Cyber Insurance
Every business in every sector should be aware of the growing risks of cyberattacks, while taking steps to keep their data and their systems secure. Cyber insurance can cover you for the costs associated with a data breach or a cyberattack, including loss of data, along with your response and recovery from the incident.
For more information, read our full guide to what cyber insurance covers, and why you need it.
Commercial Crime Insurance
While cyber insurance can cover you for the risks posed by third party criminals, commercial crime insurance can cover you for crimes committed by your own employees, including fraud, theft, and embezzlement.
Be sure to read our full guide to commercial crime insurance.
Specialist Insurance For Recruitment Agencies From James Hallam
James Hallam is an independent Lloyd’s broker with a dedicated team of experienced insurance professionals who care about protecting your business. We will help you understand the unique risks you face as a recruitment specialist, before helping you access the specialist cover you need at a competitive price.