Umbrella company and recruitment agency insurance – what does it cover?
The world of insurance is a complicated one. What is covered? Is the correct insurance in place? Is the insurance company trying to get out of paying a claim? All common questions.
There is a common misconception within the recruitment sector (and associated ones such as the umbrella market) that if a worker is engaged via an umbrella company, the liability for any damage, accident or injury would fall on the umbrella company to pay any potential damages. This is not always the case and is always dependent on the circumstances of how and why the claim came about.
What insurance does Clipper hold?
Through our insurance broker Sutton Winson, who manage all our insurance claims, we have a number of policies in place to protect our business.
Employer’s Liability: - Covers our business in the event a third party is injured, or if their property is damaged as a result of our business activities. Cover can extend to our supplied personnel dependent on the circumstances of a claim.
Professional Indemnity: - Protects our business for claims brought due to alleged negligent acts, errors or omissions while carrying out the professional conduct of our business. Cover can extend to our supplied personnel dependent on the circumstances of a claim.
Public Liability: - Covers our business against third party claims that arise in our place of business (a visiting candidate, for example), and in some cases, where someone who works for our business, injures a member of the public or their property. If the third-party claims against our business and are awarded damages, our Public Liability insurance could potentially cover the costs including legal fees that may occur in defending a claim.
What is the basis of our insurance?
As mentioned above, there is a common misconception that because a worker is engaged through an umbrella company, that claims should be brought against the umbrella company. However, it is usually the case that the umbrella company has no supervision, direction or control over the worker supplied to the site. Typically, this would be the same basis on which a recruitment agency would supply a worker according to standard T&Cs.
In essence, an umbrella company or recruitment agency are not present on site and are merely supplying a worker. Typically, many insurance related claims should actually sit with the hirer with whom the worker is assigned. An umbrella company’s insurance would typically cover instances where the business activity of the company (in supplying the worker) was negligent or caused injury.
In many cases, the hirer will seek to absolve themselves of making a claim under their own insurance to protect their own claims history.
What sort of things might this cover?
The number of types of possible insurance claims and the nuances between them are almost endless. It is impossible to state whether a claim would be upheld in any given hypothetical scenario. The below though, give some sort of idea as to the sort of claims that our insurance (or indeed a recruiter's insurance) would cover:
· An employee of our business fails to reference check an individual is fit for purpose when being supplied, you/your client then suffers a financial loss due to the contractor’s inability to do the specified job. You or the hirer may seek damages from our business, as a result of ourselves failing in our sourcing and placing requirements.
· A common type of public liability claim involves medical or care workers transporting patients from a chair to a bed for example. If the patient is injured because they were not lifted properly, or only one carer was assisting when two are required, the patient can make a public liability claim against the company that supplied the worker(s).
· When tendering for a contract an Umbrella business accidently submitted a competitor’s financial and trade secrets to a direct competitor of the company they were tendering for.
As a recruiter, what should you do if the client brings about a claim?
If you are informed about a possible insurance claim due to the actions of a temporary worker supplied by Clipper Contracting Group, you should firstly check the terms of the contract on which the worker was supplied. On most standard recruitment terms, there will typically be a clause suggesting that the worker supplied is under the supervision, direction and control of the hirer &/or under the Legal Liability of the end hirer when on assignment. Should this be the case, you can kindly inform the hirer of this and suggest they direct the claim towards their own insurance.
Should they deny this or still wish to pursue a claim, they may direct it towards the recruitment agency or the umbrella company the worker was engaged through.
What is the process when a claim is made against Clipper Contracting Group?
Should a claim be brought about against Clipper Contracting Group, the first thing we will do is inform our insurer. We will then collect, with the recruiter’s assistance, incident reports from both the hirer and the worker involved, along with any photographic evidence.
This will be supplied to Sutton Winson, our insurance broker who will manage the claim. Once provided, they will assess the initial claim and provide a response within 14 days. They may ask for additional information or could state the outcome of their findings straight away.
Where required, they will liaise with the hirer’s insurance company in order to establish who is liable for the incident, allowing you, as the recruiter, to go about, well, recruiting!