The need for a unique staffing agency policy is more important than you probably realize. Temporary staffing companies face a very specific sets of risks that will not be covered in a standard insurance policy.

The very nature of a temporary staffing company is what puts it at risk; its employees are primarily work at off-site locations, under other people’s supervision. This creates gaps in coverage that usually aren’t even noticed until there is a claim. Most frequently, staffing firms experience claims in the area of professional liability. Here is a real life example of this:

A staffing agency provided two temporary book keepers for a year. During this time, the two bookkeepers failed to pay property taxes as well as mortgages on the company’s properties. This resulted in a $1 million loss for the company.

The company sued the staffing agency that supplied those employees, due to negligence. Further investigation showed that both employees had histories of poor work performances. The case was settle for more than $325,000 and the staffing firm incurred a defense cost of about $100,000.

The moral of the story is that is the staffing company has completed a correct pre-employment background check, it might have discovered these particular employees’ poor work histories. However such circumstances cannot always be foreseen or avoided, and this is when staffing agency insurance comes in handy. In such an instance as the one above, there was a clear case of errors and omissions, a type of coverage that can be included in a policy for your staffing company.

Keep in mind, a general liability insurance policy would not cover your business in a situation such as this. By obtaining specific Errors and Omissions Insurance coverage, you can tailor your policy to include defense and settlement costs as well!

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