The importance of maintaining appropriate insurance coverage applies to temporary staffing agencies due to a number of risks these types of service businesses are exposed to. First, they hire people to work for other companies. As a result, they’re exposed to allegations of discrimination and other employment practices issues. They also send them to these outside companies that will employ them to perform work temporarily or part-time, at the insured’s place of business.
As a result of having two employers involved, there can be potentially significant coverage gaps that may arise. Given many of the unique issues facing temporary staffing agencies, and arising from the use of temporary workers, these agencies must, at the very least, obtain appropriate temporary staffing insurance coverage. This is by far one of the best investments they can make for their company.
Some important insurance options to consider
A temporary staffing agency and its clients have an array of options for many types of insurance coverage. As a starting point for ensuring they have the necessary insurance coverage, temp staffing agencies and their clients should both obtain a commercial general liability (“CGL”) policy; a temporary staffing liability policy; and an employment-practices liability insurance policy.
Understand that a temporary staffing liability policy provides coverage that a CGL does not provide. Unlike a CGL, a temporary staffing liability policy provides coverage for certain errors or omissions of an employee or temporary employee. Because the typical temporary staffing liability policy provides coverage for wrongful acts of both employees and temporary employees, its coverage provides benefit to both the temporary staffing agency and businesses using the services of temporary workers.
If, for any reason the temp agency’s client seeks to hold the staffing agency liable for an error made by a temp employee the staffing agency placed, this policy provides them with the necessary protection. Under similar circumstances, for the business using temporary employees, the policy provides protection should a third-party seek to hold it liable for an error made by a temporary employee.
There is something at stake for everyone involved and temporary staffing insurance can provide the type of coverage that many of these businesses could face ruin by not having these policies in place.