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If you’re responsible for organising insurance for a recruitment consultancy, you may sometimes wonder exactly what your premium is covering you against? What’s so difficult about insuring an office? Isn’t that all a recruitment business needs?
Well, no! There is a lot more to insuring a recruitment business than insuring the pens, papers and the coffee machine.
So, why do you need full and comprehensive insurance cover for your recruitment business?
For starters, what if you supply a temp who gets hurt on site, or if you supply a temporary driver who steals the load he’s supposed to be delivering?
In these instances, do your terms and conditions cover your business 100%? Or could a zealous lawyer put the blame on you and drag your business into court to defend itself? If that were to happen, would your current insurance policy protect you?
So many recruitment consultants buy inappropriate insurance. They don’t mean to, they just don’t speak to someone who specialises in their sector, so don’t always get the proper advice.
As Prizm Solutions specialises in recruitment, we’ve listed below the 10 key insurances that you should purchase to ensure you and your business is fully protected.
Tip 1: Make sure to get Professional Indemnity Insurance. This is the core cover you need, as it’s there to protect you in the event that the advice you give turns out to erroneous and costs someone else money. A classic example would be supplying a candidate who couldn’t do the job, because you’d failed to properly check their credentials. Or maybe a HGV driver who hadn’t got the right driving licence for the work being undertaken. Whilst these may seem pretty basic errors, they do happen. With over 40 years’ experience in the insurance industry, these are genuine claim examples that have been dealt with.
Tip 2: Check out your Employers & Public Liability cover. Employers Liability is required by law to cover injury or illness to your own internal staff. If arranged properly, this will also cover the contingent liability from any temps working on site.
Tip 3: Public Liability. Public liability is a low risk for this sector, but you can only buy Employers Liability with Public Liability so you’ve got to have it! However, it’s a useful cover to have, as Public Liability covers injury or damage to third parties or their property.
Tip 4: Consider Drivers Negligence Insurance. This is an interesting cover, because it’s one that is often described by insurance companies as a loss leader! That’s because, some recruitment agency clients will use every opportunity get money back from the agency (and/or their insurers) for the slightest damage to a vehicle being driven by a temp. Most recruitment agencies only buy Drivers Negligence insurance when under pressure to do so, for example, if they’re told they have to supply drivers with this type of insurance in order to win a contract. However, it’s a very useful type of policy to have. Unfortunately, many insurance companies (and brokers) don’t understand all details about how Drivers Negligence works, so make sure you speak with a broker or insurer who specialises in this, otherwise you may not get the full picture.
Tip 5: Legal Expenses. Legal Expenses (including Contract Disputes) is another important insurance to have if you’re in the recruitment business. In a perfect world, clients always pay. But we all know that, in the real world, they don’t! That’s why this cover is so useful, especially as it’s tied in with other sections of policy. It’s not uncommon for a client to refuse to pay, and then sue you for breach of contract (in which case, you may need to drag in your Professional Indemnity cover to defend you!).
Tip 6: Don’t forget Cyber Insurance. One erroneous click of a mouse by one of your team, and you’ve instantly let cyber criminals into your system, enabling them access to all your employee and client data, leading to a possible potential GDPR breach. In today’s society, with the increase in cyber-attacks, businesses need to have a plan for WHEN they’re attacked, rather than IF they’re attacked. If you did suffer a data breach, and you weren’t insured, you would have to call the Information Commissioners Office (ICO) to explain. Then you’d have to tell all your clients/employees/suppliers and provide credit monitoring. However, if you hold Cyber Insurance, it’s much simpler. You call your insurance broker/company, and they sort all the legal stuff and also pay the specialist IT teams who can unpick the hack to save the day. Without it, there’s not only a massive amount of work, but there’s a lot at stake. Businesses that suffer a cyber-attack may experience financial loss, disruption to business and lost clients – which may put the whole business itself as risk.
Tip 7: Make sure you protect you, not just your company. Most insurances protect the Limited Company, but there are over 60 acts of government that allow HMRC, HSE and even your customers and suppliers to circumvent the Limited Company in order to sue the individual director for their personal assets. That’s why company directors purchase Directors Liability cover - as the company pays for it, but it protects the individual. And the great news is, it’s not considered a benefit in kind!
Tip 8: Make sure you get paid! We’re operating in tough times, which means some clients won’t want, or won’t be able to pay you. That’s where Credit (Bad Debt) insurance can be worthwhile. It’s there to protect you in the event a customer defaults. This is a specialist area, but in essence you cover the bad clients as well as the good clients on what they call a ‘whole turnover policy’.
Tip 9: Don’t forget to cover your own staff. As it becomes increasingly difficult to attract and retain staff, insurance can help as an added value benefit of employment. Examples might include Private Medical Insurance, Death in Service Life Assurance and Personal Accident insurance. Adding any or all of these can help to make you a more valued employer.
Tip 10: Office contents and the coffee machine! Yes, insurance on your equipment and assets is always sensible, as is Loss of Profits/Business Interruption insurance in case something does happen to the building you trade from and you can’t work. Whilst most of us can work from home these days, a real life unexpected emergency that tests your Business Continuity Plan can still play havoc with your business’s ability to trade effectively! If you haven’t got a business continuity plan, that’s when an insurance company can help, because one call to them and it becomes their problem, not yours.
Hopefully, you’ll now understand that, whilst it’s obviously still important to insure the desks and the coffee machine, these could be much less important than ensuring you’ve got the rest of your business (and your personal assets) covered!
