Temporary Staffing Insurance: Liability, Programs, Costs & More

According to the American Staffing Association (ASA), the largest association of staffing agencies in the US, there were sixteen million employees per year against nearly fourteen million during the pandemic in the pre-pandemic period. However, market size and steady demand make selling Temporary Staffing Insurance Programs an attractive demographic target for agents. 

Published on November 30, 2021

temporary staffing insurance
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The ASA Staffing Index four-week moving average indicates temporary and contracts staffing employment for the four weeks ending Nov. 14 was 22.4% higher than the same period in 2020. Growth in the sector is encouraging news for agents selling temporary staffing insurance coverages. 

What is Temporary Staffing Insurance & Who Needs It?

Temporary employees fill positions in all levels and industries, including industrial, office, clerical, administration, professional managers, engineers, IT professionals, scientists, and health care specialists. Virtually all require temporary staffing liability, and most will need Workers Compensation and other non-liability insurance protection found in temporary staffing insurance programs. 

Employment and temporary staff agencies are the top prospects for temporary staffing risk management services because of the significant risk of hiring temporary employees. However, their need for well-conceived temporary staffing insurance programs remains constant. 

Types of Temporary Staffing Insurance

This guide to Temporary Staffing Insurance Programs features the typical coverages for staffing firms to source their unique insurance needs with specialty insurance providers. Read on to find details for policies most often included in Temporary Staffing Insurance Programs. 

Commercial General Liability (CGL)

A CGL policy is a core coverage for all business operations, including temporary staffing agencies. That's because a CGL policy protects the business and owners against claims of third-party bodily injury and property damage. 

Protection against Personal and Advertising Injury is also a part of the coverage in a CGL policy. Examples of claims include injury from false arrest, detention, or imprisonment. Also included are malicious prosecution, wrongful eviction, slander, or libel. Additionally, it provides liability from an oral or written publication that violates one's right to privacy, unauthorized use of another business' advertising, and infringing on the copyright, trade dress, or slogan by a temporary staffing agency's advertisement.

Medical Payments are included in standard CGL coverage. Regardless of fault, it pays medical expenses for bodily injury caused by accident on the insured's owned or rented premises or due to certain aspects of its operation. Since exclusions and circumstances apply, policies should be read and thoroughly understood by insureds and their agents. 

Commercial Property Insurance

Commercial Property Insurance helps pay repair and replacement costs for business-owned property damaged by fire, storm, explosion, and other covered perils. Coverage includes real estate, electronics, computer and standard business equipment, fixtures, furnishings, and artwork. Additionally, commercial property insurance protects the property of others under the care, custody, or control of the insured. 

Crime Insurance

Also known as Commercial Crime Insurance, this policy covers property and financial losses due to a temporary staffing firm's employees committing illegal acts, including theft, forgery, fraud, and computer fraud. It pays regardless of whether performed by an employee or outside actor. Since crime policies only cover the insured's monies, securities, and property, a policy endorsement is necessary to protect the property of the staffing firm's clients. In addition, most commercial property coverages have exclusions for employee dishonesty that results in losses stemming from stolen money or securities, which makes this essential protection for temporary staffing agencies.

Cyber Liability Insurance

Staffing agencies maintain sensitive corporate and personal data making them a valuable target of hackers. Cyber liability insurance helps to pay legal defense and settlement fees. It also covers services related to restoration and recovery costs, such as credit monitoring. In addition, cyber liability insurance pays up to policy limits and provisions for ransom and extortion demands and for expenses relating to notifying affected parties about data breaches involving their data. 

Other types of protection found in cyber liability policies include paying for security investigations, costs of compliance, and regulatory fines. Since there is no standard cyber liability policy, they are unique to each carrier with varying limits, terms, and conditions. Therefore, it is incumbent on agents to educate and inform their clients about what this policy does and does not cover.

Employment Practices Liability (EPL)

Because the employees of temporary staffing agencies perform their duties under the direct control of their clients, agencies have unique employment-related risks. For example, EPL insurance helps pay an agency's legal defense and settlement costs from lawsuits brought with accusations of wrongful termination or treatment, discrimination, sexual and other types of harassment, and similar issues relating to their employment. 

EPL insurance pays legal and other costs associated with claims such as wrongful failure to employ or promote, unlawful deprivation of a promotion or additional career opportunity, and wrongful discipline, demotion, or negligent evaluation. It also covers losses from lawsuits claiming employment-related libel, slander, humiliation, defamation, and privacy invasion. 

In most cases, employment-related lawsuits are brought jointly against the temporary staffing agency and its client company. As such, a temporary staffing agency's EPL insurance must identify temporary employees as covered under the definition of employees covered by the policy. 

Typically, clients contractually require protection from EPL claims brought by temporary staffing agency employees contracted to work for them. Most EPL policies require specific endorsements or contract inclusions to provide agency clients with EPL coverage for their legal fees and damages stemming from claims made by their temporary employees. 

Professional Liability

Also known as Errors and Omission insurance, professional liability insurance safeguards a business against claims of unsatisfactory work done for a temporary staffing agency's client. When a client's expectations for temporary staff's type, quality, and appropriateness are not met, lawsuits often result. Professional liability coverage includes paying to defend claims of undelivered services, work mistakes, and professional negligence. 

Workers' Comp

Workers' Compensation insurance is a legal mandate in most states. It pays employees' medical costs and for their wages when lost due to work-related injuries and illnesses. Temporary staffing agencies that place their staff on a short-term basis but remain employed by the agency while on assignment need adequate workers' compensation insurance to cover employees who suffer sickness or injury while on the job.

Temporary Staffing Insurance Costs (and what factors affect the price)

Many factors go into temporary staffing insurance costs. Rates depend on location, size, payroll, sales, and claims history. For a typical small business temporary staffing agency, the premium for a standard $1,000,000/$2,000,000 Commercial General Liability Insurance policy ranges from $90 to $120 per month. The costs of Temporary Staffing Insurance Programs depend on coverage limits and how many different policies are included in the bundle. For example, some clients have more significant on-job risk exposures and will pay more as a result. In addition, the costs to insure clerical workers are less than those hired for manufacturing or construction jobs. 

Best Temporary Staffing Insurance Programs

When you begin searching for the best temporary staffing insurance programs, the Program Business Market Directory is the place to start. It's responsible for more than $2 billion in written premiums. The directory connects carriers, MGAs, wholesalers, and program administrators with the nation's most robust agency database. ProgramBusiness.com is the conduit that serves both sides of the insurance distribution system for specialty programs.

A quick search for temporary staffing insurance on ProgramBusiness.com finds Worldwide Specialty Programs. For more than 50 years, its exclusive focus has been developing insurance programs that protect staffing firms of all types and sizes with sound, customized insurance solutions. From asset protection to loss control, Worldwide Specialty programs are devoted to applying its market expertise, and network to helping its staffing firm clients and brokers access the best temporary staffing insurance programs available anywhere.

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