Recruiting Business Insurance
Getting business insurance for your recruitment agency is essential.
Recruitment agencies face numerous risks such as employee theft, cyber-attacks and even natural disasters. They also need to protect against lawsuits arising from allegations of negligence or malpractice.
For example, this type of business may face claims for failure to carry out appropriate background checks on candidates or not complying with hiring regulations.
We’ll help you find the most personalized and affordable coverage for your unique business.
Recommended: Next Insurance is dedicated to matching small businesses with the right policy at the best price.
Best Insurance for a Recruiting Business
General liability insurance is — generally speaking — one of the most important insurance policies for a recruitment agency.
Some of the risks general liability insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
As a heavily regulated industry, recruitment agencies must take necessary measures to protect their business against unforeseen circumstances. In addition to general liability insurance, there are other types of policies that recruitment agencies can consider:
- Professional indemnity insurance: This type of insurance protects businesses from potential legal action taken by clients who feel they have suffered financial losses as a result of the services provided by the agency. Professional indemnity insurance covers claims for negligence, errors or omissions, and breaches of confidentiality or intellectual property.
- Cyber liability insurance: As technology plays an increasingly important role in the industry, it’s crucial to protect against cyber threats such as data breaches and hacking attacks. Cyber liability insurance covers costs associated with data restoration, legal fees and damages resulting from data breach events among others.
Recruiting agencies have two choices when it comes to purchasing business insurance: brick and mortar or online. Both options come with their own set of advantages and disadvantages that should be carefully considered before making a decision.
- Traditional brick and mortar insurers: Brick and mortar insurance providers offer the advantage of face-to-face interactions with agents who can provide personalized service and advice. These providers typically have established reputations within the industry and may offer a wider range of coverage options than their online counterparts. However, brick-and-mortar insurance providers may also come with higher overhead costs due to their physical locations.
- Online insurers: These providers offer ease of access to policy information, streamlined application processes, and potentially lower premiums due to reduced overhead costs.
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Cost of General Liability Insurance
On average, recruiters in America spend between $400 - $700 per year for $1 million in general liability coverage.
Compare the average cost of general liability insurance for a recruiting business to other professional industries using the graph below.
Several factors will determine the price of your policy. These include your:
- Location
- Deductible
- Number of employees
- Per-occurrence limit
- General aggregate limit
You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy.
A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.
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Common Situations That General Liability Insurance May Cover for a Recruiting Business
Example 1: During an open house event for high school students hosted by your company, a guest slips on a wet floor and seriously injures themselves. General liability insurance would pay for the guest’s medical costs and your legal fees in the event of a lawsuit.
Example 2: During an office tour, a potential investor reaches for an award on your trophy shelf and accidentally knocks the entire unit onto their head. They accuse you of improperly securing the shelf and threaten to sue. General liability insurance would cover the investor’s medical costs, your legal fees, and any settlement payouts.
Example 3: A local rival claims you’ve stolen their logo design for your updated business logo and threatens to sue. General liability insurance would cover your legal fees and any payout awarded in a settlement.
Other Types of Coverage Recruiting Businesses Need
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some of the most common types of coverage:
Professional Liability Insurance
While you’ve spent countless hours training so you can give clients the best possible advice, there’s always a chance they may decide your recommendations resulted in a mistake or other issue and sue for damages. Professional liability insurance, or “errors and omissions” insurance, provides protection for any related negligent acts and covers your legal fees if a claim goes to court.
Workers’ Compensation Insurance
Most states require businesses to carry workers’ compensation insurance for their part-time and full-time employees. This coverage protects your employees if they become injured at work or fall ill after a work-related accident. It not only covers an employee’s medical bills and lost wages if they need time to recover but also any disability or death benefits stemming from a work-related accident.
Business Interruption Insurance
If a fire or other natural disaster forces you to temporarily close, you could lose important clients and revenue while you wait for repairs. Business interruption insurance would help cover your operating costs and lost revenue until you can reopen.
Commercial Umbrella Insurance
While your general liability insurance policy covers most claims, some accidents or lawsuits may be so catastrophic that they threaten to exhaust the limits of your primary coverage. Commercial umbrella insurance protects you from paying out-of-pocket for any legal fees and awarded damages that exceed your primary policy.
Additional Steps To Protect Your Business
Although it’s easy (and essential) to invest in business insurance, it shouldn’t be your only defense.
Here are several things you can do to better protect your recruiting business:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up an LLC or corporation to protect your personal assets. (Visit our step-by-step guides to learn how to form an LLC or corporation in your state.)
- Stay up to date with business licensing.
- Maintain your corporate veil.
Recruiting Business Insurance FAQ
Yes, absolutely. You will need to first get a quote from an online business insurance provider like Next Insurance. Next allows you to then purchase a policy immediately and your coverage will be active within 48 hours.
A typical business owner’s policy includes general liability, business interruption, and commercial property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.
"Business insurance" is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.
Yes, it is always a good idea to buy business insurance to learn what the costs will be to help with business planning, but also to protect your business as you’re setting up. For example, you’ll need an office or building to work out of and therefore you’ll need to protect it before opening your business.
Not necessarily. Certain exceptions may be written directly into your recruiting business insurance policy, and some perils may be entirely uninsurable.
Yes, an LLC is meant to create a legal barrier between your business and your personal assets and credit. If you haven’t formed an LLC yet, use our Form an LLC guide to get started.
An LLC doesn’t protect your business assets from lawsuits and liability– that’s where business insurance comes in. Business insurance helps protect your business from liability and risk.