Generally speaking, most professional people buying professional indemnity insurance only really have to think about themselves.
If you’re buying recruitment consultant insurance, however, or cover for your employment agency, it’s slightly different. There’s a unique, additional risk to your business: the people you place.
But why are they a risk? You're not responsible for their work, are you?
Well, it's possible you are, yes. Which means you might need something called 'vicarious cover' added to your policy.
The answer lies in the contracts you have with your clients. Either way, you'll need to find out. And then decide if your insurance should cover your vicarious liability or not.
Why having the right type of recruitment consultant insurance matters
Here's a simple why-it-matters explanation.
A recruitment consultant’s job is to source and place staff for clients. But you know that.
What you might not know is professional indemnity insurers have identified two fundamental risks with that:
- Your negligence when sourcing and placing staff
- The negligence of the staff you place.
Here's the important bit.
Because these risks are clearly defined, insurers separate cover into two different policies. So, recruitment consultant's insurance covers either:
- your negligence only or
- your negligence and that of the staff you place.
These are called, respectively, non-vicarious and vicarious policies.
You might think you need one type of recruitment consultant insurance policy when you actually need the other. And that matters because it could mean you’re not covered when you think you are.
Vicarious or non-vicarious cover?
If your job is to find and place staff for your clients, and that’s it, then that’s where your liability ends. Your insurance needs to cover your ability to match the right person to the job, so non-vicarious insurance is enough. You only need cover for yourself and your business.
However, placing people on temporary contracts (like in a care home) is different. If an employee you’ve placed causes harm to someone (or something), your client’s insurance is unlikely to cover them. It’ll be you who picks up the tab if there’s a claim of negligence.
That’s when you need vicarious cover. It covers you, your business, and those temporary employees if you have to fight an allegation that they’ve made a mistake, damaged something, or if there’s compensation to pay.
What kinds of recruitment consultants may need vicarious cover added to their insurance?
Whether you need vicarious cover added to your policy really just depends on the nature of your placements’ work. We get asked for it by all kinds of recruitment consultants and employment agencies. Including ones who specialise in domiciliary care and providing agency nurses.
Most recruitment consultant insurance policies won't cover vicarious liability as standard. So, ideally, your insurer or broker should ask if you need it when you buy your policy.
Understandably, insurers are more comfortable vicariously covering the work of relatively low-risk, office-based staff (admin, IT etc) than high-risk, high-value people (nuclear engineers, bankers etc). This is particularly so if lots of staff are placed at any one time.
Likewise, they prefer permanent staff to temps. That's because there’s usually a more robust recruitment process for permanent staff, meaning they're a lower risk.
Our advice is: don’t assume either way.
Don't live vicariously... know your limits
Understanding where the vicarious liability lies for the people you place and the mistakes they make is the first step to deciding what recruitment consultant insurance you need.
Just to recap, if you place temporary staff, you'll probably need vicarious cover. That's because your client's insurance often won't cover temporary staff. So if they break something (or someone), it's on you to cover the damages.
However, if you place permanent staff, you'll be looking for a non-vicarious policy. Your client will take responsibility for the work of any staff you employ.
And if you place both temporary and permanent staff, vicarious cover will be the way to go.
All clear? Just call us on 0345 222 5391 if you need more help.
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