Staffing Agency Insurance: Cost, Coverage & Providers
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Staffing agency insurance is a set of business policies agency owners can purchase to protect their assets. Each policy covers different risks many employment agencies face by paying for the costs associated with them. At a minimum, most agencies need general liability to cover third-party injuries and property damage which costs $400 to $1,000 annually.
Staffing agency insurance costs can vary greatly, so owners usually benefit from comparing offers from several carriers. CoverWallet makes that easier with a single application most owners can complete in less than five minutes to get quotes from multiple insurers.
How Staffing Insurance Works
Staffing agencies face different risks based on their business operations. Consequently, each agency owner needs to select the staffing insurance policies that work for their business. Most states require agencies to carry workers’ compensation insurance for their onsite employees, but temp staffing agencies need coverage for the workers they place with clients too.
All types of staffing agencies also need general liability and commercial property insurance. Because of their low risk for third-party lawsuits and costly property damage, staffing agency owners can usually get these coverages in a business owner’s policy (BOP) for less than what they’d spend on separate policies. Staffing agency BOPs usually cost $500 to $1,500 per year.
Staffing Agency Insurance Costs
Staffing agency insurance costs depend in part on the number of policies and the amount of coverage selected. Another important factor is the industries they serve. Temp agencies that supply workers in manufacturing or construction will most likely pay more for their general liability and workers’ comp than an agency that only places clerical workers.
Staffing Agency Insurance Costs & Deductibles by Insurance Type
Insurance Type | Annual Premium | Coverage Amount | Typical Deductible |
|---|---|---|---|
General Liability Insurance | $400 to $1,000 | $1 million per occurrence / $2 million aggregate | $0 to $1,000* |
BOP | $500 to $1,500 | Liability: $1 million / $2 million Property: Varies based on property value | $200 to $500 |
Professional Liability Insurance | $700 to $2,500 | $1 million per occurrence / $2 million aggregate | $0 to $1,000* |
Workers’ Compensation | $200 to $2,000 | Varies based on industry being recruited and insurance provider | Varies based on state law |
*General liability insurance does not usually require a deductible, but business owners may request one to lower their premiums.
Policies, coverage amounts, and industries aren’t the only things insurers look at when calculating staffing agency insurance costs. Other business characteristics and policy selection also come into play.
Some other factors insurers consider when determining premium include:
- Deductibles: A deductible is an amount a policyholder is responsible for in a claim. Selecting a higher deductible usually results in a lower premium.
- Claims history: Multiple claims in a short time can make a business look risky to an insurer, so they typically increase costs accordingly.
- Revenue: Insurers often charge higher premieres to staffing agencies with higher revenue because those agencies may have an increased chance of more expensive lawsuits.
- Employees: More staff means a greater risk of employee theft and injury as well as additional opportunities for client interactions to go badly. As a result, larger firms often have higher premiums for workers’ comp, general liability, and commercial crime.
Workers’ Compensation Insurance Costs for Staffing Companies
Nearly every staffing agency needs workers’ compensation insurance for their office employees. Coverage is required in all but Texas to pay for injured employees’ medical bills and lost wages. However, temporary staffing agencies also need coverage for workers placed in other businesses, which adds to their overall staffing insurance costs.
The cost of workers’ compensation insurance for staffing companies is based on each employee’s job risk, the agency’s payroll, and its claims history. As a result, employers often pay more for workers’ compensation for employees in high-risk jobs. For instance, workers’ comp costs for residential construction workers typically range between $2.82 and $35.95 per $100 of payroll while clerical workers often cost 8 cents to $1.48 for every $100 of payroll.
Tip: Safety training can help keep your employees safe while also reducing their workers’ comp claims and lowering the cost of your staffing insurance. While they may place workers with other companies, those temps are still considered staffing agency employees. As a result, the agency owner is responsible for their safety.
Types of Insurance for Staffing Companies
Staffing agencies face risks, so they need staffing insurance to protect their assets in case of lawsuits or accidents. Their most common staffing agency risks are covered by general liability, commercial property, and workers’ compensation insurance. However, agencies may require other staffing insurance policies to cover other risks like negligence accusations and employee crime.
Most Common Types of Staffing Insurance Policies
Type of Insurance | What it Covers |
|---|---|
General Liability Insurance | Allegations of property damage, bodily injury, and reputational harm made by nonemployees |
Commercial Property Insurance | Repair and replacement costs for business-owned property, including real estate, equipment, fixtures, and furnishings |
Workers’ Compensation Insurance | Lost wages and medical bills for employees who suffer work-related illness or injury |
Commercial Crime Insurance | Monies, securities, and other property lost through criminal activities |
Professional Liability Insurance | Legal fees arising from clients’ allegations of professional negligence |
General Liability Insurance
General liability insurance protects staffing agencies by paying the costs associated with third-party claims of property damage, physical injury, and advertising injuries like defamation. If your business faces one of these accusations, general liability typically covers the injured party’s medical or repair bills or your legal fees if they decide to sue.
Some general liability claim examples include:
- A client accuses your staffer of damaging their copier when on a temporary assignment
- A delivery person trips over an electrical cord in your reception area
- A competitor sues for defamation over a tweet sent by your social media manager
Standard general liability policies typically cover these claims, whether your or your employees’ actions cause them. Temporary staffing agencies’ general liability coverage extends to the workers they place in other businesses because those workers are agency employees.
Commercial Property Insurance
Commercial property insurance pays for repairs to agency-owned property when it’s damaged by fire, theft, vandalism, or other covered perils. Policies cover your agency’s physical space, office equipment, furniture, and fixtures up to the coverage limit, minus your deductible. Agency owners who rent can opt for commercial property insurance that covers only their offices’ contents.
Staffing agencies typically have minimal property exposures. This, combined with their comparatively low risk for general liability lawsuits, means most agencies qualify for a BOP.
Workers’ Compensation Insurance
Most states require workers’ compensation insurance for staffing companies to cover employees’ medical bills and lost wages if they suffer work-related illnesses or injuries. Depending on state law, business owners are required to purchase coverage or buy it from a state fund when they hire staff. Some states require coverage for even one employee.
Staffing agencies that place workers in permanent positions only have to get workers’ compensation insurance for their in-house employees. Temporary staffing agencies need coverage for both in-house employees and workers they place with clients.
Agency-paid temporary workers don’t pass the IRS test for independent contractors as they are paid by the hour, cannot control their work situation, and receive their benefits.
Commercial Crime Insurance
Commercial crime insurance covers financial and property losses due to illegal activities, such as forgery, computer fraud, and theft, whether an outside actor or an employee commits them. Most policies cover the funds and property of the policyholder, so temporary staffing agencies need an endorsement for items owned by clients.
Situations that may trigger crime insurance include:
- A temporary worker accused of stealing inventory from a retail client
- Your bookkeeper committing check fraud
- A burglar stealing money from your agency
Commercial property policies typically exclude coverage for stolen money or securities, and they also don’t cover employee dishonesty. This makes commercial crime insurance an important policy for any business, but especially for temporary staffing agencies.
Professional Liability Insurance
Professional liability insurance, also known as errors and omissions (E&O) insurance, protects your staffing agency in lawsuits over your professional services. For example, if a client accuses you of sending an underqualified candidate, who then makes errors that cost the client money, professional liability insurance pays for your legal fees.
Other examples of claims typically covered by professional liability insurance include:
- Errors: Costing an applicant a job by sending them to the wrong interview
- Omissions: Failing to perform background checks
- Misleading statements: Misrepresenting a workers’ qualifications to get them a job
Some insurers combine professional and general liability coverage in a single policy for staffing agencies. This may be a way to save money, but owners should review the coverage with an agent to ensure it’s sufficient.
Additional Staffing Agency Insurance Policies
The five staffing agency insurance policies listed above are the ones most agencies need. However, many owners have operations or supply workers in industries that require additional staffing insurance.
A few examples of other staffing insurance policies agency owners may need to have include cyber liability insurance, commercial auto insurance, and computers and media coverage.
Cyber Liability Insurance
Cyber liability insurance covers costs associated with data breaches and cyberattacks, such as client notification, credit monitoring, and legal fees. Most agencies have some cyber liability exposures, if only because any employee can accidentally respond to a phishing email. However, information technology (IT) staffing agencies may have the greatest concern.
Commercial Auto Insurance
Staffing agencies with business-owned cars most likely need commercial auto insurance. Most states require business owners to have at least a minimum amount of liability coverage in case they cause damage and injuries to other people, but owners can also buy coverage that pays for their damages and injuries. They can also get hired and nonowned auto liability insurance for the vehicles they hire, rent or borrow for business.
Computers & Media Coverage
Computers and media coverage, also called electronic data processing coverage, helps pay to restore or replace lost digital data when your agency’s computers or network are damaged by certain perils, including theft, vandalism, and malware. Some policies also cover repairs to software and hardware. Commercial property provides limited coverage for these items.
Staffing Agency Insurance Providers
Getting staffing agency insurance can be difficult, especially for agencies that place temporary workers since they have insurance needs in multiple locations. As a result, agency owners usually have to find specialty insurers or work with brokers who have access to multiple carriers to find coverage.
Top Staffing Agency Insurance Providers
Provider | Best For |
|---|---|
Staffing agency owners who want to compare quotes for before they buy insurance | |
Agency owners who want a combined general and professional liability policy | |
Staffing agency owners who want employment practices liability insurance (EPLI) coverage for placed employees | |
Staffing agency owners who want to minimize the stress of workers' compensation audits | |
Agency owners who want premium discounts or free legal consultations |
Some of the top providers of insurance for staffing companies include:
CoverWallet
CoverWallet is an online broker specializing in small business insurance for many industries and can offer coverage to employment placement agencies. The company partners with top-rated business insurance carriers, including CNA, Chubb, and Liberty Mutual, to help small businesses find the appropriate coverage for their operations.
Agency owners should apply for staffing insurance with CoverWallet when they want to do comparison shopping. CoverWallet makes it easy to get multiple quotes for quality insurers by offering a single application that transmits your business information to all available carriers. The application takes less than five minutes to complete and often returns multiple quotes.
Bankers Insurance
Bankers Insurance is a full-service independent insurance agency that can get temporary staffing agencies coverage. In addition to offering quotes from multiple carriers, Bankers Insurance agents can often negotiate better prices for their clients.
One of Bankers Insurance’s most unique offerings is the option to combine general and professional liability coverage into a single policy. This streamlines administration and makes Bankers Insurance ideal for agency owners who want to deal with one insurer, premium, and policy for these two essential coverages.
Philadelphia Insurance Companies
Philadelphia Insurance Companies, or PHLY, is a financially sound national carrier that has been developing insurance products for niche markets for more than 55 years. Its experience with hard-to-insure businesses has led them to create a flexible package for temporary staffing agencies.
PHLY’s temporary staffing agency insurance program starts with high general liability limits—up to $3 million in coverage over the course of the policy term. However, business owners who want employment practices liability coverage should consider working with PHLY. The policy automatically extends to workers placed with clients, and the insured can opt to use their own counsel or the carrier’s counsel.
AP Intego
AP Intego is an online insurance agency that offers a complete lineup of business insurance policies, but their bread and butter is workers’ compensation insurance. It has a workers’ comp pay-as-you-go plan that bases your premium on your actual monthly payroll rather than an estimate for the year.
AP Intego’s payment plan makes it the ideal company for staffing agency owners who want to pay accurate monthly premiums, so they don’t have to worry about unexpected bills when it’s time for their workers’ compensation audit. The company’s technology coordinates with your payroll service to determine the appropriate premium and automatically withdraw payments.
World Wide Specialty Programs
World Wide Specialty Programs is an insurance company that focuses solely on the staffing industry and can offer customized solutions for all types of staffing agencies. The company coverage comes from Zurich, a leader with more than 140 years of experience creating insurance programs for niche industries.
Agency owners might consider working with World Wide Specialty Programs for the company’s depth of experience, but an even bigger draw is the potential discounts the company makes available through partner organizations. Members of the American Staffing Association can get premium discounts, and any World Wide EPLI policyholder receives free consultation time with the law firm Jackson Lewis, LLP.
Tips on Getting Staffing Agency Insurance
Getting staffing agency insurance is essential for your business’ success, but it’s seldom as simple as selecting policies and paying your premium. There are a few things you can do to make sure you’re buying quality coverage at a fair price.
Work With an Agent Who Knows the Industry
Agency owners should work with insurance agents who understand the staffing industry. In general, staffing agencies face a unique set of risks, but some can also have additional exposures based on their specific operations. An insurance agent with industry experience can more easily identify these exposures and recommend the appropriate staffing insurance to protect your business.
Compare Quotes From Multiple Carriers
Insurance is considered to be staffing agencies’ second highest overhead cost after payroll. This makes it essential for agency owners to find affordable coverage that also fully protects their business, and the best way to do that is to compare multiple offers. Utilizing an insurance broker will not only help you get a favorable insurance rate but also can help you navigate the differences between your insurance options.
Classify Your Staffing Agency Correctly
In many situations, people use the terms staffing agency and employment agency to mean the same thing. For insurance, however, employment agencies make permanent placements. This distinction is important to make on your application because misclassification can impact coverage for the workers you place with business temporarily.
Bottom Line
Staffing agencies come in all sizes and serve almost every industry. Hence, finding the right insurance, payroll provider, and financing for staffing agencies isn’t easy. Agency owners need to identify their risks and partner with insurance professionals who understand the industry to ensure they get the coverage they need for their particular operations. A good insurance agent can also help keep their overall insurance costs down by helping owners identify best practices and set up safety programs when appropriate.
