When you’re starting your own recruitment business, you’re probably focused on finding clients, negotiating your way on to preferred supplier lists and building a database of candidates ready to cater for the all the roles you’re going to be asked to fill. You’re probably not thinking about startup insurance. Perhaps you should be…
There are a vast number of recruitment agencies in the UK, with the number getting larger every year. Many of these businesses operate as one-person companies and some with only a select number of trusted consultants. With only one or a few employees and limited turnover, what are your recruitment startup insurance needs? Legally, you require Employers’ Liability (EL) insurance as soon as you become an employer; guidance from the government states…
“You must get Employers’ Liability (EL) insurance as soon as you become an employer – your policy must cover you for at least £5 million and come from an authorised insurer. EL insurance will help you pay compensation if an employee is injured or becomes ill because of the work they do for you. You may not need EL insurance if you only employ a family member or someone who is based abroad.”
Therefore, as soon as you have an employee (as defined by here, by the Employers’ Liability (Compulsory Insurance) Act 1969), you must buy EL insurance. You can read more about Employers’ Liability in this HSE Brief Guide for Employers.
The only other legally required insurance is Motor; if you own and/or operate vehicles on public roads, you are required to have these correctly insured. Most people already understand this requirement, as it is the same for their private ownership of vehicles.
Moving beyond what’s legally required, what insurances are sensible for a start-up business to hold?
Public Liability (PL) insurance protects you if a third party (such as a client, candidate or member of the public) suffers injury or property damage because of your business; it should cover the cost of any legal expenses involved in the claim, as well as the compensation awarded to the third party. Public Liability is a fundamental cover for most businesses and is something that all – even the smallest recruitment start-ups – should consider.
And what specialist insurance might a recruitment agency need?
Professional Indemnity (PI) insurance is not an uncommon insurance; it protects you if you are accused of providing inadequate professional services, consultancy or advice to a client. PI should cover the legal costs and expenses involved in defending your business as well as any compensation that is awarded to the claimant. This insurance is particularly suited to the recruitment industry as your business provides a professional service and has responsibilities, such as vetting candidates. Read more about Recruitment Agency Professional Indemnity here.
Vicarious Liability insurance protects your recruitment business if, through a contractual requirement, you are liable for the actions of your temporary placed workers. It is usual (or standard) for contracts to determine that the client is responsible for the temporary workers that you place, however, depending on your contract wording you may have some liability for their actions, errors and omissions.
Fidelity Bonding provides a similar cover, but in this instance you are protecting your organisation from any liability for your workers stealing or acting fraudulently towards your client. Fidelity Bonding is focused on protecting you from any dishonest acts that your temporary workers or employees (specified individuals) may do.
RecruiterCover can provide suitable insurance for your startup, including cover for these insurances, as well as buildings, contents and other basic requirements, in our commercial combined policy. You can read more about our specialist recruitment insurance here.