Finding cost-effective insurance cover for your recruitment agency can be a complex and time-consuming task.
To make things simpler, our experts have compiled this quick guide to the most common types of insurance cover available to recruiters that specialise in providing resource to the care and medical sectors.
Professional Indemnity Insurance
Professional Indemnity Insurance (PII) provides cover for your business if a claim is raised against you by a third party because they believe that you have caused them a financial loss due to negligence, errors or omissions in the work you have done for them.
Typical limits of indemnity: on an Any-One-Claim basis. Choices from: £100,000, £250,000, £500,000, £1,000,000, £2,000,000, £5,000,000 or £10,000,000.
Claim example Background: A recruitment agency supplies temporary care staff to a care home. One of the care workers placed by the agency was not adequately vetted—the agency failed to check a past disciplinary issue flagged in a previous role. This individual later mistreats a vulnerable resident in the care home. Claim: The care home sues the recruitment agency for negligent vetting and misrepresentation, arguing that the agency failed in its duty to properly screen the worker and provide a competent, safe candidate. The home claims damages for: - Harm caused to the resident (which may lead to regulatory scrutiny or reputational damage) Coverage outcome: The claim would likely fall under PI insurance because it involves an alleged failure in professional services—specifically, the recruitment agency's vetting and placement process. |
Public Liability Insurance
Public Liability Insurance provides cover if your business causes damage or injury to a third party or their property, or a third party raises a claim against you for damage or injury and your business needs to be defended.
Typical limits of indemnity: on an Any-One-Claim basis. Choices from: £1,000,000, £2,000,000, £5,000,000 or £10,000,000.
Claim example Background: A temporary care worker supplied by the recruitment agency is working a shift at a care home. While assisting a resident in the dining area, the care worker accidentally spills a hot beverage on a visiting family member, causing burns and injury. Claim: The injured visitor files a public liability claim against the recruitment agency, alleging that the agency’s supplied staff member caused them personal injury due to negligence. They seek compensation for: - Medical treatment Coverage outcome: This type of incident would fall under public liability insurance because it involves bodily injury to a third party (not an employee) resulting from the actions of someone the agency supplied. The temporary worker may have been provided to the care home under your own Standard Contract Terms of Business which should pass the responsibility for any claims under Public Liability to the care home, but these contract terms can be challenged if the care home believes that your business is somehow responsible in full or part for the incident, they may try to pass the claim back to you. It is worthwhile ensuring you have Public Liability so that you have an insurer that will defend your position in the event of an incident. |
Products Liability Insurance
Products Liability Insurance provides cover for any injury or loss caused to a third party by any item that has been given to them by you. This type of insurance is typically for businesses that sell or manufacture goods, but there are instances where you could give an item to a third party, and they could make a claim against you as you provided them with the item.
Typical limits of indemnity: on an Any-One-Claim basis. Choices from: £1,000,000, £2,000,000, £5,000,000 or £10,000,000.
Claim example Background: You order in some USB sticks preloaded with information about your business because you want to hand them out to prospective clients. Claim: You receive a complaint from a third party that says that they plugged the USB stick into their laptop, and it crashed their system. They had to take the laptop into a repairer to get it running again. Coverage outcome: While you didn’t manufacture the USB stick, the third party has a right to gain compensation from you as you were the business from whom they received the USB stick. You would pass this matter onto you products liability insurers as they will deal with these claims. |
Employers’ Liability Insurance
Employers’ Liability Insurance protects your business if an employee raises a claim against you for an injury they have suffered while they are at work. Your business is required under the Employers’ Liability Act to have this cover if you employ staff. There are some exceptions to this rule such as if you are the only person employed by your business, but it is always good to check this with your legal advisers before ignoring Employers’ Liability.
Typical limits of indemnity: on an Any-One-Claim basis. The standard limit provided will be £10,000,000, but if you have more than 50 employees working at any one location at a given time, you may want to consider increasing this limit to £25,000,000.
Claim example Background: A temporary care worker is sent by the recruitment agency to work at a care home. During their shift, they are instructed to lift a resident without proper assistance or equipment. The worker injures their back and is unable to work for several months. Claim: The injured worker files an employers’ liability claim against the recruitment agency, alleging that:- They were not provided with proper manual handling training,- The agency failed in its duty of care to ensure the placement offered a safe working environment,- There was no risk assessment or communication about safe lifting procedures. Coverage outcome: This claim would fall under employers’ liability insurance because it relates to an injury suffered by an employee (or deemed employee) in the course of their duties, and the recruitment agency has a legal responsibility for their health and safety—even on a third-party site. As with the example given for Public Liability, if you have provided this worker out under your own Standard Contract Terms of Business, you would expect the care home to take responsibility for this incident, but it is possible that a temporary worker that has been placed by you for a number of years could be deemed to be employed by you. You will always have obligations under the Health and Safety at Work Act to ensure that anyone you are providing is going to be adequately trained and placed in a safe working environment. |
Dishonesty of Temporary Workers cover
Dishonesty of Temporary Workerscover provides protection for your business if a claim is made against you for an act of fraud or theft is committed by a temporary worker you provide.
Typical limits of indemnity: our policy provides a limit of £25,000, which is the maximum payable for all claims during any one period of insurance. It is possible to get this limit increased if you are required to offer higher levels of cover by your client.
Claim examples Background: You have supplied a temporary worker to a care home. Claim 1: A claim comes in from your client saying that your temporary worker had use of one of their mobile phones, but they have failed to return after leaving them. Claim 2: A temporary worker places timesheets in for working at a care home for a few months, but after the care home checks their records, it is discovered that the temporary worker only showed up to work on the first day and has not been seen since. This example has been on the rise during recent years. Coverage outcome: If the temporary worker has been making fraudulent claims and collecting pay for work that they haven’t completed, or they have stolen items, you would refer this to your insurers under the Dishonesty of Temporary Workers cover. |
Directors’ and Officers’ Insurance
While PII provides protection for your business if there has been a negligent act, error or omission, Directors’ and Officers’ (D&O) Insurance provides cover if action is brought against an individual director or senior manager within your business for any negligent acts or errors made by them while making decisions within your business.
We can also extend the Directors and Officers cover to include:
Company Reimbursement Extension – this extends the cover to indemnify your business if your business decides to compensate your senior member of staff for their financial losses following a D&O claim.
Employment Practices Liability – this extends the D&O cover to include claims made by employees for negligent acts errors and omissions made by your business whilst acting as an employer of people.
Typical limits of indemnity: For D&O, we can provide: £100,000, £250,000, £500,000, £1,000,000 or £2,000,000 limits. For Company Reimbursement, we can provide £100,000 or £250,000 limits. For Employment Practices, we can provide: £100,000, £250,000 or £500,000.
Claim examples Under Management Liability you could see claims from employees who believe that decisions made by a director of the business has had a negative effect on the business which led to the business being closed and they lose their jobs. For the Company Reimbursement extension, there may be circumstances where an individual director is the subject of a claim for harassment and the company offer to reimburse the director for their financial loses. Under Employment Practices there may be an example of a claim from an employee for constructive dismissal if they feel that the company missed steps in their processes or purposefully created a situation where that employee felt that they had to resign their post. |
Office Contents Insurance
Office Contents Insurance provides cover for loss or damage to your business’s assets such as office equipment or portable equipment that is taken away from your offices. This can be a loss due to a theft of the item(s) or a fire at your premises.
Typical limits of indemnity: As you will be insuring for the loss of physical items that your business has purchased, you should set your sum insured under this section of cover so that it matches the cost to replace all of the items as new. It is important that you do not underinsure the value of your business assets as your policy will have a claims condition regarding the application of “Average” if you are found to be under insured. If your claim is made subject to Average, it means that you have under insured, and the insurers will reduce the payout by the same percentage as you under insured.
Claim examples Claim 1: You provide an employee with a laptop and mobile phone so that they can carry out their work when working from home. The employee’s home is broken into, and their business laptop and mobile phone are stolen. Coverage outcome: As this is portable business equipment that is covered under your insurance, the insurers will send you a settlement for the replacement of the equipment lost in the theft. Claim 2: You have told your insurers that the value of your office contents is £5,000, but there is a fire at your premises and assessors advise insurers that your total contents was worth about £10,000. Coverage outcome: Your insurers will pay your claim based on your requested contents value of £5,000 but reduce your claim payment to £2,500 as you under insured the value of your contents by 50%. |
Business Interruption Insurance
Business Interruption (BI) provides cover in the event of a loss under your property damage that affects the performance of your business, or which adds additional costs to your P&L just to keep your business operational.
BI can be insured on two different bases:
Loss of Income (including Additional Costs) – In the event of an incident at your office premises, such as a fire, flood or theft, Loss of Income will compensate you for any reduction in your business income caused by the incident at your offices.
Increased Cost of Working Only – As with most office-based businesses, recruiters’ income isn’t typically affected by a fire or other incident at the office premises. Employees can work from home even if the office premises are out of action, and the process of placing temporary workers or permanent staff can continue to bring in income. As a result, most recruitment businesses opt for this form of cover, which only offers protection against the additional costs of working that arise due to the loss.
Typical sums insured: For Loss of Income: you tend to use your projections for income over the next 12 months, but insurers will compare this to previous years’ performance when they are assessing any claims. If you can demonstrate that your projections were being achieved before the loss occurred, then insurers are reasonable when working through the claim with you. For Increased Cost of Working: it is recommended that you research and put in place a Disaster Recovery Plan. This will help you calculate the effect and additional costs that your business would encounter in the event of a serious incident.
Claim examples Claim 1: Loss of Income You suffer a flood at your office premises, and the damage means that the premises cannot be used for 6 months. If you can demonstrate that your income has been affected by the flood, your insurers will look at previous years’ income performance, then provide you with monthly top up amounts to ensure that your income remains comparable to your previous years’ performance. The insurers continue to provide income top ups monthly until your business is back up and running. Claim 2: Increased Costs of Working In the event of a flood at your premises, you would report any additional expenditure your business faces due to the loss, such as costs for staff overtime to restore records and additional rent for temporary premises. The insurers will provide support on those additional costs so that they don’t affect your business income. |
Group Personal Accident Insurance
Group Personal Accident (GPA) Insurance is a payment that can be made to employees or their families in the event of an employee’s death or serious injury that occurs while they are employed by your business.
There is also a monthly payment of £100.00 to help employees with any loss of income they might face while they are temporarily unable to attend work.
Typical benefits: The standard benefit we offer under this scheme are £10,000 or £25,000 for death and capital benefits. If you require higher benefits, we can source a separate GPA cover that allows you to choose those that best suit your requirements.
Claim example Claim: An employee suffers a broken leg while on a skiing holiday. Coverage outcome: Your insurers will assess the injury and if it means that your member of staff is unable to work for a temporary length of time, the cover will pay out a weekly benefit to the staff member. |
Legal Expenses Insurance
Primarily, this is a legal advice line that you can contact if you require legal advice concerning your business activities.
The legal expenses insurer will provide guidance on elements like employment disputes or contractual disputes, then if the situation leads to legal action, they will assess the situation and if they believe that they have a better than 50% chance of winning the case, they will provide legal assistance to fight the matter for you.
It is important to note that your legal expenses insurer must be involved in the process from the start. You can’t claim back legal costs you have incurred fighting a case via your own solicitors that your legal expenses insurer has not been party to. Your legal expenses insurer must be the party that you deal with in the first instance. They may agree that you can use your own solicitors, subject to costs.
Claim examples Claim 1: Employment Disputes An ex-employee raises a claim against you for constructive dismissal. You would contact your legal expenses adviser, and they will provide you with support. Provided you have followed the appropriate employment regulations/guidelines, they will assess the situation. If they believe the case can be won, they will appoint a solicitor to work with you to fight the case. Claim 2: Contract Disputes and Debt Recovery You place a temporary worker at a care home. Your Standard Terms of Business requires that the care home pay a fee to you if they offer the temporary worker a permanent role within their business. Your temporary worker has been hired as an employee by the care home, but they are avoiding paying you the fee to which you are entitled. Your legal expenses insurers will work with you to try to recover the fees that are owed to you. |
Talk to us
If you have any questions about our insurance covers for your recruitment business, please contact our team at:
Email us at recruitmentinsurance@uk.lockton.com (opens a new window)
Cal us on 0330 678 1031
Visit us at www.locktonrecruitment.com (opens a new window)
