Why do recruitment agents need insurance?
Recommending the wrong candidate
Your client may accuse you of causing them a financial loss by recommending or supplying the wrong person for the job.
Failing your duty
Part of your job is to check the references and background of not just candidates but also companies seeking employees. Either party can sue for failing your duty.
Accusation of being the cause of an injury
While much happens over the phone and video conferencing, final interviews still take place face-to-face. Compensation claims of alleged physical or mental injury are not unheard of.
Saying something wrong
Being sensitive to someone’s circumstances is considered a professional duty. As a recruitment consultant or agency, you deal with people from all walks of life. An innocent joke or comment could quickly end up in an accusation against you.
Professional indemnity insurance for recruitment agencies
Professional indemnity insurance protects recruitment agents from claims of negligence or inadequate advice that could lead to financial losses for your clients.
As a recruitment consultant, it's crucial to be flexible and supply suitable personnel to fulfil the constantly changing requirements of your clients. Despite your best endeavours, there may be occasions when job placements result in unforeseen outcomes, which can create tension in relationships and possibly even legal disputes over compensation. Furthermore, protecting your reputation can take time and effort.
Professional indemnity insurance is crucial for protecting yourself and your business reputation.
What does professional indemnity insurance for recruitment agencies cover?
To protect themselves from accusations of misconduct regarding their professional advice or work.
Cover includes:
- Failing your duty of care
- Acting negligently
- Giving the wrong advice or recommendation
- Confidentiality breaches
For example:
- Supplying an unsuitable candidate could result in a financial claim against you.
- Missing a crucial detail in a contract or a candidate's background could lead to a costly dispute.
- A candidate may sue you for damages if you’re deemed at fault for placing them with the wrong company.
What is vicarious liability in professional indemnity?
Professional indemnity insurance always covers your own negligence. And sometimes it can also cover the negligence of the staff you place. This is called vicarious liability.
Your job, as a recruitment consultant or agency is to find the right staff for your clients. When purchasing professional indemnity insurance, you need to consider the extent of your activities.
If, after you have found and placed staff for your client, your contractual obligations are complete, then non-vicarious professional indemnity insurance should be sufficient.
On the other hand, sometimes a recruitment agency could be supplying temporary staff. For example, you may be providing social workers to a local council to work for particular cases or projects. In certain circumstances, you could be held liable for the negligence of the staff you place. You’re likely to need a professional indemnity with vicarious cover.
Does Suited cover vicarious liability?
Yes, but only if the staff you place is still under your direct control and supervision.
Switching or cancelling professional indemnity insurance for recruitment consultants
If you cancel your professional indemnity policy in the UK, you cannot make any claims against it.
Therefore, when switching to a new recruitment agency insurance provider, it is important to ensure that your new policy includes coverage for your previous work, referred to as "retroactive cover".
Should I keep professional indemnity insurance if I take a break from recruiting?
It’s wise to keep your professional indemnity if you retire or take a break from recruitment consulting. Claims against professional misconduct can surface months or years after you delivered the work.
If a past client sues you for damages and you have cancelled your professional indemnity, you will not be covered.
How long you keep your cover in place is up to you; consider the type of consulting you did and the likelihood that a client might bring a claim against you.
Public liability insurance for recruitment consultants
Public liability insurance shields recruitment consultants from claims of injuries or property damage. It is often a contractual requirement when working for larger clients or local authorities.
When meeting with clients or the public as part of your recruitment process, there is a risk of causing harm or damage to their belongings. Even a small mishap, like spilling coffee on a client's laptop, can lead to significant financial consequences.
To avoid this, consider getting public liability insurance. This insurance covers unexpected incidents such as slips, falls, or accidental damage to someone else's belongings. It protects against third-party claims and can help safeguard your recruitment from potential legal action.
What does recruitment consultant public liability insurance cover?
Having public liability insurance can be very helpful in the event of injury claims and demands for compensation.
Cover includes:
- Accidental injury or death
- Accidental property damage
For example:
- Following a trip in your office, some days later, you may receive a demand for compensation.
- A visitor to your office may claim their property suffered damage or went missing. If you don’t meet their demand to pay, they might decide to pursue legal action.
Other insurance recruiters buy
Commercial legal expenses
Most commercial legal expenses insurance will protect recruitment agencies against various tax and legal issues you may encounter due to your profession, which are not covered by professional indemnity or public liability.
At Suited, we combined £100,000 of commercial legal expenses insurance with helplines and other tools to better assist you in dealing with these issues, and it’s part of your subscription.
Commercial Legal Expenses offers qualified advice and assistance with:
- Legal and tax matters concerning your recruitment
- Criminal prosecution
- Unpaid invoices (over £200)
For example:
- HMRC investigates your tax affairs
- You are facing an investigation from a professional body
- You need legal help chasing a significant unpaid invoice
- You’re being taken to court for breach of contract
Portable Electronics insurance
As a recruitment consultant, you likely depend on different gadgets and equipment to carry out your job. If the cost of such equipment is high, it's wise to consider having portable electronics insurance.
This insurance can help cover the costs of repairing or replacing your work belongings in case they get stolen or accidentally damaged.
Shopping for recruitment consultant insurance
If you're considering Suited for your recruitment agency insurance, it's important to consider the following factors.
Cheap recruitment consultant insurance
While some providers may offer lower prices, they may not have expertise in your industry or offer excellent after-sales service. At Suited, we provide multiple ways to contact and respond quickly to your needs.
Check the insurer's reputation
When you need insurance the most, it's important that it's there for you. That's why Suited only uses financially stable insurers with a top A+ rating for payout reputation.
Look for run-off and retroactive cover options
Some insurance providers may not offer coverage for past incidents or the option to switch your professional indemnity to a run-off mode. However, at Suited, we offer both.
Watch out for restrictive policy wordings or high excess
While some providers may offer attractive prices, they may limit their coverage. Suited's professional indemnity and public liability policies come with a £0 excess.
