10 Standard Liability Concerns for Staffing Companies
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For many staffing firms – particularly those making placements outside of the white collar or professional space – when reviewing their property & casualty insurance programs, focus is often placed on workers’ compensation coverage. This can be attributed to the scale of premium in comparison with coverages such as general liability and auto liability.
And while incidences of liability claims may be far less common than workers’ compensation, the costs associated with an individual claim can be substantial, highlighting the need for coverage that’s comprehensive and broad. Also, because of the relative lack of frequency of liability claims, coverage gaps and exclusions may not be evident until a claim actually occurs.
Due to the unique nature of the staffing industry, standard liability policies need to be modified to correctly insure the most common exposures faced by staffing firms. In fact, only a handful of carriers provide adequate coverage for staffing firms through programs specifically tailored to meet the needs of the industry. As a result, many firms may believe they’re appropriately insured, but unknowingly may be missing critical coverages.
Some common concerns to be aware of are listed below:
- Misclassification as an “employment agency,” which is applicable to firms making permanent placements, but not those making temporary placements. Bodily injury and property damage claims arising out of the actions of temporary employees may then be excluded from coverage.
- Exclusions of coverage for personal and advertising injury, which typically is excluded by default when erroneously classified as an employment agency.
- Standard exclusion of coverage for damage to property in your (or your employee’s) care, custody or control, such as damage to a forklift being operated by an employee.
- Lack of coverage for claims that arise from an employee driving a client’s vehicle.
- Coverage provided only for errors or omissions made in the placement of employees, but not for the firm’s vicarious liability for errors or omissions made by the employees once they’ve been placed.
- If vicarious liability coverage is provided, exclusions may still exist for placements made under specific professions, such as accountants, IT or medical professionals.
Employment Practices Liability
- Coverage provided only for suits made by internal corporate employees and not for suits made by temporary employees.
- No coverage provided to defend or pay damages on behalf of a staffing firm’s client when sued by a temporary employee, regardless of whether the firm has agreed to provide the coverage contractually.
- Lack of coverage for theft of client’s property by temporary employees.
- If coverage is provided for client property, coverage can be restricted to not extend to property of third parties held by a client or property held outside of the client’s premises, such as property in transit.
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