The Recruiter’s Guide to Professional Indemnity

Recruitment Agencies offer a specialist and professional service to their clients and candidates. Providing this service requires protection because if you make an error that leads to financial or reputational loss by either the client or candidate you might be liable. This is where Professional Indemnity insurance steps in…

Professional Indemnity insurance can be general (a policy wording that is designed to be suitable for most commercial organisations) or industry-specific (the policy wording is tailored to risks experienced in one industry or sector). You may find that a general commercial Professional Indemnity policy covers your recruitment business, however, industry-specific policies may provide more suitable cover.

Professional Indemnity insurance that is designed for recruitment agencies, consultants, head hunters and other professional recruiters will provide cover for a range of circumstances related to your professional service provision to both clients and candidates. You can expect Professional Indemnity for recruitment agencies to cover some or all of these areas:

Civil Liability

As a recruiter, your expertise is relied upon to match the skills of your candidates to those of your clients and to try fitting them together like a jigsaw puzzle. However, the jigsaw puzzle will be ever changing, adapting to constant market forces, meaning that you and your employees have to keep up with your clients’ requirements as far as possible. Any errors made by you or any employee of yours whilst matching these skills could potentially lead to a loss to your client. Civil liability cover under a Professional Indemnity policy will provide an indemnity for losses suffered by your client which you are deemed to be negligent.  In addition, some policies also extend to help “mitigate” such losses which can prove useful to both you and your client, helping you to retain that relationship with your client.

Fraud / Dishonesty

If you are a recruiter supplying temporary workers, you will may be responsible for financial payments and a large amount of trust is vested in you by your clients and your employees.  You will no doubt review and audit your procedures to ensure that any potential for fraud is minimised.  However,  to eliminate this kind of risk completely cannot be guaranteed. For example,  where an employee of yours colludes with an employee of your client, and bogus fees are charged.  Therefore, it is advisable to consider a Professional Indemnity policy which includes Fraud / Dishonesty cover in the event of financial loss to your client.

Breach of Confidentiality

You are trusted to retain a large amount of confidential information, such as whether your client has informed you of their commercially sensitive plans, or your candidates providing you with their personal credentials. Unauthorized release of such information could result in a claim being made against you, with the most common likelihood being the accidental release of one of your candidate’s CV to their current employer, This  could cause considerable embarrassment and potentially harm their career prospects.

When assessing what insurance your recruitment agency needs, Professional Indemnity insurance is likely to be high on the list. You can choose between general or industry-specific insurance; be sure to discuss the cover provided and any concerns that you have with your broker or insurer in order to make sure you’re getting the right cover for your business. If you choose to go industry-specific, take a look at a specialist commercial combined policy like RecruiterCover Insurance that provides a range of insurances that are all tailored to your recruitment sector needs.

Find out more about RecruiterCover Insurance.