Employment Agency Insurance Policy Information

Employment Agency Insurance. Employment agencies match job openings with qualified job seekers. They may be compensated for their services by the company with the job opening or by the person seeking employment, on either a commission or flat fee basis.
Services commonly offered are placing a worker into a permanent position, finding a specific type of worker for a customer company, providing employers with short-term or temporary help, or providing workers with job counseling.
The worker seeking employment, the company seeking the worker and the employment agency must all fully understand the terms and conditions of the employment arrangement.
The contractual agreement should define who is obligated and responsible for providing workers compensation coverage, who pays the fee for the employment arrangement, who handles payment to the employee, who accounts for taxes and other mandatory deductions, and who provides miscellaneous employee benefits, if any, such as health insurance or a 401(k) savings plan.
Finding the right employees is an important part of building a successful business. As an staffing agency, your are responsible for the listing of job vacancies and referring applicants for employment with other firms. The persons referred to these other companies are not employees of the employment agency.
Although this might seem quite simple, many risks come along with operating this type of business. With the risks involved, it is critical for you to get the right employment agency insurance to protect your business. In this post, we'll take a look at how you can get the best insurance for your staffing firm.
Employment agency insurance protects your staffing firm from lawsuits with rates as low as $87/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked employment agency insurance questions:
- What Is Employment Agency Insurance?
- How Much Does Employment Agency Insurance Cost?
- Why Do Employment Agencies Need Insurance?
- What Type Of Insurance Do Staffing Agencies Need?
- What Does Employment Agency Insurance Cover & Pay For?
What Is Employment Agency Insurance?
Employment agency insurance is a type of insurance coverage designed specifically for businesses that provide staffing services or employment agencies. This insurance protects the agency from various types of risks, such as:
- Liability claims - this covers the agency in case a worker they place causes damage to a client's property or harms someone in the course of their job duties.
- Professional Indemnity - this protects the agency from losses due to errors or omissions in their work, such as providing an unsuitable candidate for a job.
- Workers' Compensation - this covers the agency for any work-related injuries or illnesses suffered by employees.
- Employment of Employment - this covers the agency in case a client challenges the legal status of a worker provided by the agency.
The insurance provides financial protection for the agency in case of lawsuits or other legal proceedings related to their business activities.
How Much Does Employment Agency Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small employment agencies ranges from $87 to $99 per month based on location, type of positions staffed, payroll, sales and experience.
Why Do Employment Agencies Need Insurance?
The protection of your employment agency is necessary whether you rent or lease office space. While operating your business, you must have the correct employment agency insurance policies in place to protect your business from the risks that come with staffing.
Some of the risks that staffing agencies face include:
- Fire, smoke, weather or other events that can cause damage to business property
- Slips and falls or any other injury that can happen to clients or employees at your office
- Lawsuits against your business
These are just some of the risks you might face while operating your business that make it necessary for you to have employment agency insurance.
What Type Of Insurance Do Staffing Agencies Need?
Here are some of the primary employment agency insurance policies you can get to keep your staffing agency covered:
Commercial General Liability Insurance - This insurance provides you with protection when a lawsuit is made against your business. Commercial general liability insurance covers any injury or damage you cause to a third party or their property. Whether this is medical expenses or replacing damaged property, having this coverage provide you with the help you need.
Commercial Property Insurance - With this employment agency insurance, you have protection for the buildings and the contents in them that you use for the operation of your business. There is no way to predict what can happen to your staffing agency but you can rest knowing that with this insurance you are protected.
With most business property insurance you get business interruption protection. This comes in handy when there is a period that your business is unable to operate as covers the loss of income that a business suffers after a disaster.
Professional Liability Insurance for Employment Agencies - This insurance is also known as errors and omissions insurance provides you with coverage if a client decides to sue yours for negligence on your part. Some of the things that you client can sue you for include:
- Omissions
- Alleged errors
- Actual errors
- Breach of duty
Basically, if you fail to do the proper research and you cause damage to your client's business, then you can be sued. Remember it is your job to get the right person for the job for your customer. Failing to do this could result in your business being sued.
Commercial Auto Liability Insurance - For most businesses having a vehicle is critical. With commercial auto liability insurance you can keep the vehicles that you use for your business protected. If a vehicle used for your business causes damage to a third party, you will be protected if you have this insurance.
Workers Compensation - Protecting your workers is important... so important that having workers comp is required in most states for any non-owner or partner employees. When you have workers' compensation, you won't have to worry if your employees get injured while on the job.
If they are injured, and they need to have medical attention for the injury then having workers' compensation coverage will give them the help they need.
Cyber Liability Insurance - In the staffing business it is a sure thing that you will be handling lots of confidential information. This means that you need data protection. Although you may have protection there can still be a chance of your information being hacked.
If you are ever hacked, cyber liability insurance to keep your business covered. When there is a breach of the information this will help you with the costs.
Employment Placement Agencies' Risks & Exposures

Property exposures are generally limited to that of an office. Ignition sources include electrical wiring, heating and air conditioning systems, wear, and overheating of equipment. Computers and other electronic equipment may be targets for theft.
Crime exposure comes from employee dishonesty. Hazards increase without proper background checks, monitoring procedures, and securing of all records to prevent unauthorized access. All job duties, such as ordering, billing and disbursing should be separate and reconciled on a regular basis. Audits should be performed at least annually.
Inland marine exposures consist of accounts receivable if the agency offers credit, computers, and valuable papers and records for client companies' and job seekers' information. Duplicates should be made and kept in an off-site backup facility for easy reproduction following a loss.
Premises liability exposure is moderate due to the number of clients visiting the premises. The waiting area, interview, and conference rooms must be well lighted with floor covering in good condition. Exits must be sufficient in number, be well marked, and have backup lighting in case of power failure. Parking lots and sidewalks need to be in good repair with snow and ice removed, and generally level and free of exposure to slips and falls.
Personal injury liability exposures are high due to the amount of confidential information obtained from job seekers. The agency must take great care to maintain confidentiality when obtaining and releasing information regarding workers and employers.
Professional liability exposure is high. The background, training, and licensing of the agency's own employees should be verified. Employees must be matched with the needs of clients. Misrepresentation by either party may result in allegations of negligence.
Workers compensation exposures are generally limited to office-type hazards. Potential injuries include eyestrain, neck strain, carpal tunnel syndrome, and similar cumulative trauma injuries that can be reduced through ergonomically designed workstations. If workers are leased or rented out, the exposure increases as the company has little control over the client's work premises or hazards. The employment contract should specify whether the employment agency or the client company provides workers compensation coverage.
Business auto exposure may be limited to hired and non-owned (HNOA). The exposure increases if the agency offers shuttles for temporary workers, transport to job interviews, or if employees use their own vehicles for agency business. All drivers must have appropriate licenses and acceptable MVRs. Vehicles must be maintained and records kept in a central location. If the registry provides vehicles to employees, there should be written procedures regarding the private use of these vehicles by others.
What Does Employment Agency Insurance Cover & Pay For?

Employment agencies can be sued for a variety of reasons, including:
- Discrimination: If an employment agency discriminates against job applicants or employees based on factors such as age, race, gender, or disability, they may face a lawsuit.
- Misrepresentation: If an employment agency makes false or misleading statements about a job or the qualifications required, they may be sued for misrepresentation.
- Negligence: If an employment agency fails to perform adequate background checks or otherwise exercises negligence in their hiring practices, they may be sued for any resulting damages.
- Breach of contract: If an employment agency breaches their contract with a client or candidate, they may be sued for damages.
- Non-compliance with regulations: If an employment agency fails to comply with government regulations regarding hiring practices, they may be subject to fines and lawsuits.
Employment agencies can protect themselves from these risks by purchasing insurance. Here are a few examples of how insurance can help pay for lawsuits:
Employment practices liability insurance (EPLI): This insurance provides coverage for claims related to discrimination, harassment, wrongful termination, and other employment-related issues. If an employment agency is sued for discrimination, for example, EPLI can help pay for legal fees and damages.
Errors and omissions (E&O) insurance: This insurance provides coverage for claims related to professional mistakes or negligence. If an employment agency is sued for failing to perform adequate background checks on a candidate, for example, E&O insurance can help pay for legal fees and damages.
General liability insurance: This insurance provides coverage for claims related to bodily injury, property damage, and personal injury. If someone is injured while visiting an employment agency's office, for example, general liability insurance can help pay for legal fees and damages.
In summary, employment agencies can be sued for a variety of reasons, and insurance can help protect them from the financial risks associated with lawsuits. By purchasing the right types of insurance coverage, employment agencies can minimize their exposure to legal liability and protect their bottom line.
Commercial Insurance And Business Industry Classification
- SIC CODE: 7361 Employment Agencies
- NAICS CODE: 56131 Employment Placement Agencies, 561320 Temporary Help Services
- Suggested Workers Compensation Code(s): 8810 Clerical Office Employees NOC
7361: Employment Agencies
Division I: Services | Major Group 73: Business Services | Industry Group 736: Personnel Supply Services
7361 Employment Agencies: Establishments primarily engaged in providing employment services, except theatrical employment agencies and motion picture casting bureaus. Establishments classified here may assist either employers or those seeking employment.
- Chauffeur registries
- Employment agencies, except theatrical and motion picture
- Executive placing services
- Labor contractors (employment agencies), except farm labor
- Maid registries
- Model registries
- Nurses' registries
- Ship crew registries
- Teachers' registries
Employment Agency Insurance - The Bottom Line
Speaking with an experienced licensed insurance agent will help you to figure out what you need protection for in your staffing firm. When you do this, you can find the protection you need and keep your business protected from the risks it faces.
Additional Resources For Miscellaneous Insurance
Find informative articles on miscellaneous businesses including the types of commercial insurance they need, costs and other considerations.
- Adult Daycare
- Agriculture, Forestry, Fishing & Hunting
- Bail Agent
- Camp
- Cemetery
- Control of Well
- Electric Utilities
- Employment / Staffing Agency
- Enameling
- Engraving Business
- Facility Support Services
- Logging
- Mail Order
- Oil And Gas Lease
- Personal Concierge
- Photofinishing Lab
- Pollution
- Portable Sanitation
- Private Water Districts
- Process Server
- Refinery
- RV Parks & Campgrounds
- Security Guard
- Surety Bonds
- Taxidermy
- Waste Disposal Landfill
- Wedding Planner
- Specialty Accident And Sickness / AD&D
- Specialty Amusement Parks And Rides
- Specialty Auctions And Farmers Markets
- Specialty Business Risks
- Specialty Communication
- Specialty Design
- Specialty Drugs And Alcohol
- Specialty Employee Protection
- Specialty Energy
- Specialty Environmental Risks
- Specialty Firearm And Shooting
- Specialty Hazardous Materials
- Specialty Health Risks
- Specialty Machinery And Tools
- Specialty Merchandise
- Specialty Mobile And Modular Homes
- Specialty Motorcycle Risks
- Specialty Natural Disasters
- Specialty Oil And Chemical
- Specialty Prize Indemnification
- Specialty Programs
- Specialty Railroad
- Specialty Security Risks And Equipment
- Specialty Substandard Risks
- Specialty Travel
- Specialty Weather Related

Businesses need insurance for several reasons. Firstly, insurance protects businesses from potential financial losses that may result from unexpected events, such as accidents, natural disasters, or lawsuits. This financial protection can help businesses recover from unexpected events and continue to operate.
Secondly, business insurance can provide businesses with liability protection. This means that if a business is sued for damages or injuries that occurred on their property or as a result of their products or services, the insurance company will cover the legal costs and damages. Without insurance, businesses may have to pay these costs out of pocket, which can be financially devastating.
Thirdly, commercial insurance can also provide businesses with peace of mind. When businesses have insurance, they can focus on running and growing their business without constantly worrying about potential financial losses or legal issues.
Finally, business insurance can also be a requirement for certain businesses. For example, many businesses that work with the government or large corporations may be required to have certain types of insurance in order to do business with them.
In conclusion, businesses need insurance for financial protection, liability protection, peace of mind, and to meet certain requirements. It is an important aspect of running a successful business and can help ensure the long-term stability and growth of the company.