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. And the answer lies in the contracts you have with your clients. Either way, you'll need to find out. And then find out if your insurance covers it 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:
1. your negligence only or
2. your negligence and that of the staff you place.
These are called, respectively, non-vicarious and vicarious policies.
You might think you have one type of recruitment consultant insurance policy when, actually, you have 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 contracts state your job is to find and place staff for your clients, and that's it, then that's where your liability ends. You can *only* be sued for your negligence within those contracts.
In other words, your responsibility ends with making sure you get the right people for the job. Non-vicarious insurance is enough because you only need cover for you.
It's a different story if your contracts say you're also responsible for the calibre of the people you place.
In that case, if someone you've posted turns out to be hopeless and your client sues you for the consequences of his/her mistakes, you'll need vicarious cover. If you haven't got it, you'll have to fight the allegation and compensate your client yourself.
Know your limits
Whether your insurer is happy to offer vicarious cover or not depends on the nature of your placements’ work. It’s unlikely to be included as standard. Ideally, your insurer or broker should ask you about this 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.
Your policy wording will tell you what cover you have. It’s possible it's hiding behind some insurance jargon though, so if it’s clear as mud, we’ll decode it for you.
Just call us on 0345 222 5391. Or you can click here for more info on recruitment consultant insurance.
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