Owners and managers of temporary staffing agencies, while sharing similar liability concerns with other types of businesses, still must address many of their own unique exposures. They may experience risk factors that frequently aren’t covered by any standard insurance policies. Typically, an agency retains liability for the actions of any of its employees, however those employees are also primarily supervised at off-site locations by the agency’s clients.
This is a prime example of the type of arrangement that can create gaps in staffing agency insurance coverage. Understanding this requires expert knowledge of this industry since these gaps are not always evident without a thorough examination of the policy. What we don’t want to see happen is that these gaps go unnoticed until an uncovered claim is filed and requires the staffing agency to pay full damages out of its own pocket.
Knowing what your current policy lacks
A general liability policy is designed to cover bodily injury and property damage claims that arise during the course of your day-to-day business. What can affect these claims? Well, for one thing, the manner in which a policy classifies your business. This will certainly affect whether or not coverage will be provided. Frequently, temporary staffing agencies are misclassified as employment agencies. The difference is that employment agencies provide permanent employees to other businesses.
This can pose a problem for temp staffing agencies since they remain the employer of any workers they place with clients, thus making them vicariously liable for the actions of those workers. An employment agency’s liability for a placement’s actions, by contrast, ends the moment it places that employee with a client. Consequently, your general liability policy may not provide coverage for some claims if you’ve been classified as an employment agency.
This is a prime example of a type of claim that could present an issue for temporary staffing agencies, which requires a plausible solution for providing you with a reasonable measure of protection. Remember, even if you believe you’ve purchased the appropriate coverage, it can still be difficult to predict whether your carrier will pay out on a particular claim.
It’s crucial that you and your agent carefully scrutinize your policy for coverage gaps. Find an insurance broker with the necessary industry expertise to ensure that the staffing agency insurance coverage you purchase is adequate for dealing with your daily business exposures.