Why is insurance a must for recruiters?
As a recruiter, you need to have a deep understanding of both job seekers' needs and larger business goals. Even if you have a proven track record, mistakes can occur. Recruiters insurance keeps you protected by paying for client lawsuits, settlements, and other unexpected risks, like fire.
Get the right insurance
6 insurance policies every recruiter should consider
These insurance policies protect against the most common risks and liabilities in the recruiting and staffing industry.
Business owner's policy
A business owner's policy, or BOP, combines general liability coverage and commercial property insurance at a discount. Low-risk small business owners are often eligible for this bundle.
- Slip-and-fall injuries
- Client property damage
- Business property damage
General liability insurance
A general liability insurance policy defends against third-party injury and property lawsuits, such as a client who suffers an injury at your recruiting agency. It's often required for a commercial lease.
- Client bodily injuries
- Accidental damage to a client's property
- Defamation and copyright infringement lawsuits
Professional liability insurance
Professional liability coverage handles lawsuits related to mistakes, poor advice, or other accusations of professional negligence. It's also referred to as errors and omissions insurance or E&O insurance.
- Disagreements on what counts as "top talent"
- Failure to fill a role with a qualified candidate
- Listing inaccurate skillsets or employee benefits
Workers' comp insurance
Workers' compensation insurance protects human resources businesses and sole proprietors from work-related medical bills health insurance won't cover. Most states require coverage for employees.
- Medical expenses from workplace accidents
- Disability benefits for injured workers
- Legal costs from work injuries
Commercial auto insurance
Almost every state requires commercial auto insurance for vehicles owned by a recruiting firm. It covers costs in the event of an accident involving your business vehicle.
- Auto accident legal fees
- Vandalism or other vehicle damage
- Vehicle theft
Cyber insurance
Cyber insurance helps recruiters recover from costly cyberattacks and data breaches. It's also called cyber liability insurance or cybersecurity insurance.
- Ransomware attacks
- Client notification costs
- Data breach investigations
Recruiter insurance costs
From our customer data, here's a quick look at average recruiter insurance costs:
General liability: $29 per month
Business owner's policy: $44 per month
Workers' compensation: $38 per month
Factors that insurance carriers consider when underwriting your premiums include:
- Recruitment services offered, such as sourcing, executive search, and talent acquisition
- Number of employees
- Value of your business property
- Types of insurance products purchased
- Coverage limits and deductibles
- Claims history
Verified small business insurance reviews
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Common questions about recruitment company insurance
Review answers to frequently asked questions (FAQs) about recruitment agency insurance coverage and more.
Do self-employed headhunters need insurance?
While self-employed recruiters might not be required by law to carry insurance, having coverage can help you fulfill contract terms and protect your business from financial risks and liabilities.
Some states might require you to carry professional liability insurance (sometimes called errors and omissions coverage or E&O) in order to start up a recruiting agency or work within certain facilities.
This policy provides protection in the event of a lawsuit filed by a hiring manager over the recruitment process, hiring process, or even what is the best talent or a good cultural fit.
Additionally, you should keep in mind your personal auto insurance policy likely won’t cover work-related accidents, such as a collision while you're driving to meet a client.
For protection of your business-owned vehicles, you'll need commercial auto insurance. This policy covers legal fees, medical expenses, and other related costs if your company-owned vehicle is involved in an accident. For personal, leased, and rented vehicles used for work purposes, look to hired and non-owned auto insurance (HNOA).
Similarly, personal health insurance policies won't cover work-related injuries and illnesses. That means you would have to pay hefty medical bills out of pocket if you suffer an injury on the job or develop an occupational illness.
Carrying a workers’ compensation plan, even if you're a sole proprietor or limited liability company (LLC) with no employees, can financially protect you if you’re unable to work due to an on-the-job injury or illness, as well as cover your healthcare bills.
What other types of insurance coverage do recruiters need?
There are several types of insurance recruiting and staffing agencies should consider as part of their risk management plan, including:
- Employment practices liability insurance (EPLI): EPLI helps pay for legal costs when an employees files a lawsuit related to discrimination, harassment, wrongful termination, or related employment issues.
- Directors and officers insurance (D&O): D&O insurance provides coverage for directors, officers, and board members if they are sued for a decision they made on behalf of your company.
- Commercial umbrella insurance: Umbrella insurance covers legal expenses when the limit is reached on another liability policy, such as general liability or commercial auto insurance. Sole proprietors may need this coverage to meet liability limit requirements for certain clients, such as those in financial services.
Another common protection for recruiting businesses is a hold harmless agreement, also called an indemnity agreement. In short, it's a contract in which those who work with you agree they will refrain from suing your business in certain situations.
