What to Expect When Insuring a Staffing Start-Up
Liability and Workers' Compensation Insurance for Start-Ups
Whether you’re a seasoned veteran or brand new entrepreneur starting your first staffing company, you’ll quickly learn properly insuring your start-up will entail more than just a quick phone call to your local insurance agent. Just as your staffing company is in a unique and niche-focused business, so are the insurance carriers that insure staffing firms and their common exposures.
It’s imperative your insurance program not only covers first party exposures (occurrences within your own office and involving internal employees), but also third party exposures (occurrences at your client company worksites and involving external employees) as well. Due to the nature of temporary/contract staffing in which employees work at different client sites, your insurance program must be structured to cover this unique type of external exposure. Staffing firms may also have a mix of different types of clients, so the job duties of their employees may vary depending on the client and project at-hand.
Client Insurance Requirements
Your clients will not only look to your staffing firm to provide them with the employees and labor needed to strengthen their business operations, but you’ll also be required to adequately insure these employees in the event they cause any property damage and/or bodily injury either to themselves or someone else. In a previous blog post, 5 FAQs by Small and Start-Up Staffing Companies, it’s noted that prior to signing a contract with your client, you should thoroughly review the insurance requirements section to ensure it makes sense given the type of employees you’ll be placing for your client, as well as the job duties they’ll be performing. If the insurance requirements don’t make sense based on the exposures, you may want to negotiate some requirements out of the contract. Some advice on negotiating insurance requirements can be found here.
Insuring Liability & Workers’ Compensation
Once the insurance requirements are agreed upon, you’ll want to consult a staffing industry insurance broker to ensure there aren’t any additional coverages that need to be maintained to protect your business from potential catastrophic loss. This industry expert will be able to help you structure a liability package program that custom fits your organization and is flexible enough to meet potential future client requests. Assuming you have a strong background and can provide documented experience within the staffing industry (Why Underwriters Ask Staffing Companies for Certain Pieces of Information), there’s more than likely a staffing insurance carrier out there that will insure your company for all of its liability coverages as a start-up.
The task of insuring a workers’ compensation program can be more involved than the liability package program. There are different insurance carriers depending on the industry you plan to focus on for placements. For example, some insurance carriers will only insure start-up staffing firms focused exclusively on IT or healthcare. This is where it’s essential to partner with a broker who specializes in staffing, as they’ll know which insurance carrier would be a fit for your organization.
If your start-up is not a fit for any of the voluntary workers’ comp carriers, your company can get insured through the state’s assigned risk pool. This can be beneficial, as your company will begin to develop credible loss history, which should aid in the future when seeking options within the voluntary marketplace. In the meantime, your employees would be covered for any injuries and lost time at work incurred through the assigned risk policy.
These are just a few of the intricacies of insuring a start-up staffing firm. Again, it’s imperative your insurance program is not only structured for your internal exposures, but also covers your external ones as well. My advice to ensure things are done correctly? Work with a broker who has extensive staffing industry experience and involvement.
- 2017 Industry Outlook Video: Staffing
- 5 FAQs by Small and Start-Up Staffing Companies
- Know Your Digits: Workers’ Comp Class Codes
- Top 3 Workers’ Compensation Trends for Staffing Firms & PEOs
- 10 Standard Liability Concerns for Staffing Companies
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