Temp Agency Business Insurance
Getting business insurance for your temp agency is essential.
Temp agencies need to be protected against a variety of different risks, such as indemnification claims, negligence-related disputes, and contract violations.
You will also need insurance in order to cover the cost of repairing and/or replacing your agency’s assets (e.g., office furniture, work computers, etc.).
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 Temp Agency
General liability insurance is — generally speaking — one of the most important insurance policies for temp agencies.
Some of the risks general liability insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
Having said that, you will likely benefit from purchasing additional coverage. This is because a general liability policy is unlikely to holistically cover your temp agency from all potential risks:
- Negligent acts or omissions: Professional liability insurance
- Loss of income: Business income insurance
- Property damage or theft: Commercial property insurance
- Employee related disputes: Workers’ compensation insurance
It is also important to note that there are two different types of business coverage providers that you can choose as of 2024:
- Online coverage providers — Examples include Tivly or Next Insurance
- Brick and mortar coverage providers — Examples include The Hartford or CNA
In the vast majority of cases, we recommend going with an online provider as a small business owner.
This is because online providers have significantly lower operating costs and are thus typically able to offer personalized coverage at a much lower rate.
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Cost of General Liability Insurance
On average, temp agencies 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 temp agency 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 Temp Agency
Example 1: A potential client is visiting your office to discuss his employment interests. While entering the restroom, he slips and falls, hitting his head on the floor and sustaining a concussion. He demands that your business pay for his medical treatment. Your general liability insurance would likely cover this cost.
Example 2: One of the temporary workers you represent decides to sue your business, claiming that you slandered her when speaking to a potential employer. While you are not sure what she is referring to, you know that you need to hire an attorney to protect your business. The general liability insurance policy you carry would pay for your attorney fees and the cost of a settlement if one was required.
Example 3: One of your employee trips and runs into a visitor, knocking her to the floor and breaking her arm. The injured visitor decides to sue your business. With general liability insurance, your legal fees are covered by your insurer.
Other Types of Coverage Temp Agencies 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:
Workers’ Compensation Insurance
As an employer, you are most likely required to carry workers’ compensation insurance by your state. The workers’ comp policy you purchase will pay for medical treatment if an employee is injured performing job-related duties. It would also pay for some of their lost wages if they are unable to work while recovering.
Professional Liability Insurance
Professional liability insurance is designed specifically for your business, so it will protect you from mistakes and errors made by you and/or your employees. If someone decides that your professional advice or representation caused them injury and sues your business, your professional liability insurance would pay for your legal defense. It would also pay for a settlement if you needed to settle the case out of court.
Data Breach Insurance
In the digital age, there is always the possibility that your business could become the victim of cybercriminals. Data breach insurance protects you against damages caused by such events. For instance, if your client database was hacked and one or more clients sued you for damages, your data breach insurance policy would pay for your legal costs.
Commercial Umbrella Insurance
The general liability insurance policy you carry for your business will be adequate in most cases. However, there are circumstances where the limits of your general liability insurance could be exceeded—like if you lose a major lawsuit. Once the limits of your general liability insurance are reached, you are left paying the remaining damages. But if you have an umbrella policy, it will kick in when the general liability insurance stops paying.
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 temp agency:
- 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.
Temp Agency 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.
Getting business insurance will likely not be a legal requirement unless you choose to hire staff or use a company vehicle. That being said, we recommend you purchase coverage as soon as possible, as legal liability could technically arise as soon as you begin interacting with clients, and this can end up costing you thousands of dollars down the line if you are not insured.
Not necessarily. Certain exceptions may be written directly into your temp agency 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.