Owners of employment agencies must address a number of unique liability exposures, some of which will not be covered under their standard insurance policies. While the agency’s clients supervise those individual employees at locations other than their own, the agency still retains liability for the actions of those employees. This arrangement will often create gaps in insurance coverage that may not always be evident and so the policy should be examined thoroughly by an expert in employment agency insurance.
Often these gaps are not noticed until an uncovered claim arises and requires that the staffing agency pay full damages out-of-pocket. For example, let’s say that an employee, while working at a warehouse of one of your clients and, in operating a forklift, ends up causing damage to the equipment, a vehicle, or part of the structure of the building.
Your insurance should pay any claim, depending on the wording of the contract. General Liability (GL) policies cover bodily injury and property damage claims that arise during the course of day-to-day business. This means that the manner in which a policy classifies a business can affect whether coverage is provided.
Temp staffing versus employment agencies
Temp staffing agencies are commonly misclassified as employment agencies, which provide permanent employees to other businesses. This has been known to cause issues for temp agencies because they remain the employer of any workers they place, making them liable for the actions of those workers. An employment agency’s liability for a placement’s actions, by contrast, ends the moment it places the employee with a client.
So, any time an employee uses equipment owned by a client, the agency must assume liability for any damages caused as a result of using that equipment. Endorsements are available through most insurers to remove any exclusion, or you may simply add a specific sub-limit that provides coverage, but insurance carriers will only offer these additions when requested.
Speak with an agent to help determine the exact type of employment agency insurance required for your particular set of circumstances.