Why do recruitment consultants need insurance?
Missing a reference check
You run a busy recruitment agency and take great pride in the quality of your matches. But mistakes can be made in such a fast-paced environment. When your newest graduate recruiter recommends a candidate without completing thorough reference checks, it could cost more than just your pride.
Professional indemnity insurance might prove useful for your recruitment agency if a client takes you to court over an alleged mistake. It may assist with covering the cost of settling or defending a claim.
An office injury
When a potential candidate visits your staffing agency headquarters, they trip on a stray power cable near your interview room and test centre. Unable to showcase their skills, the visitor leaves without being checked into your staffing system. But this may be the least of your concerns.
Scans show the injury was more severe than anticipated and a claim is brought against you. Public liability insurance may help your recruitment consultancy to cover the costs of fighting the claim, including any compensation payouts.
Accidental data loss
The week begins as usual. But by Tuesday, your systems have been locked by malicious software – and the hacker has stolen confidential data. As a recruitment consultant, you work with databases every day to process candidates and give commercial partners informed advice. It’s the modern way, but also leaves you vulnerable to cyber risks.
Our cyber and data insurance could support a recruitment consultant with the cost of data recovery – acting fast, since we know your time is precious.
What insurance is available for recruitment consultants?
Professional indemnity insurance
Professional indemnity (PI) insurance for a recruitment agency can help with the costs of settling claims related to negligence, accidental breach of confidence and civil liabilities.
As a recruiter, you help other businesses find the talent to keep on thriving, and you’re trusted to put forward the best candidates for each role. Should your clients believe you advised them incorrectly, failed to carry out necessary candidate checks, or made a mistake in a job advert, they might dispute the value of your work. That’s where PI cover could step in.
Employers' liability insurance
If you’re a recruitment agency owner with staff, employers’ liability insurance may be a legal requirement (external link). If one of your consultants is injured in the office, perhaps slipping on the stairs, this cover might help with compensation payouts and legal fees.
A recruitment consultant could also use this insurance should former employees make claims after leaving your business – if you were insured at the time of the alleged incident.
Business contents insurance
A workplace can be many things for a recruitment consultancy. Somewhere to impress clients and interview candidates. Somewhere employees can get the experience and support they need to grow. So, if your office is out of action, productivity may take a hit. This could be over a break-in, with computer equipment stolen, or flooding after extreme weather.
Business contents insurance for a staffing agency can cover lost, damaged or stolen equipment as standard. It can also be tailored to include portable equipment away from the office.
Recruitment is diverse, so each company’s risk profile will be unique. A range of other products, including public liability, legal protection, cyber insurance and personal accident insurance, may support your enterprise, whether you’re a self-employed consultant or part of a growing agency.
These are just some of the types of business insurance for recruitment consultants that we can offer. We can provide other specific types of cover and build them into a policy that’s tailored to your exact needs.
Build my coverInsurance for recruitment consultants: FAQs
Does recruitment insurance cover candidates placed with clients?
There are two types of insurance for recruitment agencies. The version you select will determine whether cover applies to your business activities alone, or if it also covers your recruits’ work for clients.
Non-vicarious insurance for recruitment firms does not cover candidates you’ve placed – it applies only to your business, its direct employees and activities.
This means employers’ liability insurance only covers claims from a recruitment agency’s own employees, and not the recruits it secures placements for. Likewise, non-vicarious professional indemnity insurance would not cover claims of negligence by staff your agency has placed with a client.
However, vicarious insurance also covers risks related to your casual staff, such as claims of negligence.
The best way to determine which insurance is right for your recruitment business is to review client contracts. Some stipulate that recruiters are only responsible for finding and placing staff, while others say recruiters also take responsibility for candidates and their work.
What insurances do you need for a recruitment agency?
The insurance you’ll need to start a recruitment agency depends largely on how the business will operate. Asking yourself a few key questions may help to determine which covers you’ll need. For example:
- Does your plan involve a period of home working as the agency’s sole employee?
- Will you hire staff?
- Will you require a separate workplace?
If you’ll employ staff, employers’ liability cover could be required by law. Some larger clients may also ask you to have public liability or professional indemnity insurance. They might stipulate this in a contract. Also, it could be a requirement of joining your relevant industry body.
How much business insurance cover should a recruiter take out?
A recruitment consultancy’s exact insurance requirements will ultimately come down to its circumstances.
Recruitment businesses face differing levels of risk. Some focus on small projects, while others provide staff to large employers and events across the UK. Since the amount at stake may shape the scale of disputes, you may want to consider the size of your recruitment accounts when deciding how much insurance to purchase.
The limit of cover you set helps shape the cost of insurance. It’s also the maximum amount you’ll be able to claim for legal fees, compensation payouts or repairs.
Do self-employed consultants need insurance?
As a self-employed recruitment consultant, it’s likely you’ll be giving advice to the clients and companies you work with. If the advice you give is revealed to be poor, or results in a financial loss, clients may decide to sue you for damages – and you could be personally liable.
Professional indemnity insurance could provide financial help with both legal costs and compensation payments. Learn more about business insurance options if you’re self-employed.
Related articles and guides
What is professional indemnity insurance?
Professional indemnity cover might prove useful for service or advice-based work, such as for a recruitment agency. Get answers to common questions about PI insurance.
What is breach of confidentiality?
Handling data brings the risk of facing a claim – even if you only store names and email addresses. Find a breach of confidentiality definition in our FAQ guide.
A guide to the perfect induction for new starters
A great induction paves the way for a successful partnership between employee and employer. Find handy tips for welcoming staff in our guide to employee inductions.