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National Insurance Awareness Day – the importance of insurance for recruitment and umbrella companies

On National Insurance Awareness Day, it’s important to highlight that it’s not just a question of obtaining cover for your business, but ensuring that the cover provided is tailored to your individual needs. This means looking for the right types of cover for the work you carry out, and appropriate levels of indemnity to cover your risks.

Insurance acts as a safety net for most businesses who hope they never have to make a claim, but many will. It’s only when it comes to claiming on insurance that you come to realise whether you have adequate protection for the risks you encounter, and how effective the claims service is in ensuring you are compensated for insured risks in an efficient and timely manner.

In the dynamic and highly competitive landscape of recruitment in the UK, ensuring you have appropriate insurance – and with the right levels of indemnity – is crucial for both recruitment agencies and umbrella companies. These entities play a pivotal role in the employment sector, bridging the gap between employers and job seekers. However, this position comes with its own set of risks and responsibilities.

Adequate insurance coverage not only safeguards your business but also builds trust with clients and contractors. Here, we explore why insurance for recruitment and umbrella companies is indispensable and delve into specific cover areas such as drivers’ negligence cover and vicarious liability cover.

Why Recruitment and Umbrella Company Insurance is Essential

  1. Risk Management: Recruitment agencies and umbrella companies handle various sensitive tasks, which can include managing payroll, ensuring compliance with employment laws, and matching candidates with appropriate job roles. These activities mean you are exposed to numerous risks, from legal disputes to data breaches. Ensuring the correct insurance is in places helps to mitigate these risks, providing financial protection and support.
  2. Legal Compliance and Peace of Mind: Operating without proper insurance can lead to significant legal repercussions. Ensuring that you have adequate employers’ liability insurance is legally required and must be demonstrated, while public liability insurance is also highly recommended. Business operating in this sector will also benefit from tailored professional indemnity insurance, with extensions to cover drivers’ negligence and vicarious liability (more on this later). Other covers to consider include directors’ and officers’ insurance (or management liability cover), which protects individual company directors or senior management from liability claims made against them personally, through to cyber liability insurance to cover the risk of cybersecurity breaches.
  3. Reputation and Trust: Clients, contractors, and other businesses are more likely to engage with recruitment agencies and umbrella companies that demonstrate a commitment to risk management. Holding appropriate insurance is a testament to your business’ reliability and professionalism, enhancing its reputation.


Key Insurance Areas for Recruitment and Umbrella Companies: Drivers’ Negligence Cover and Vicarious Liability Cover

Drivers’ Negligence Cover

Drivers’ negligence cover is an extension to Public Liability and can be crucial for recruitment agencies and umbrella companies where you are agreeing contractually to negligent damage caused to the client’s vehicle as a result of one of the placed drivers.

If a driver were to be negligent whilst on assignment and driving a client’s vehicle, the contractual agreement could hold the recruiter or the umbrella liable for the damaged vehicle. This does not however, extend to third-party damage or injury.

A very common example would be a supplied driver on assignment with Tesco, driving a HGV Lorry, has not planned their route and has driven the HGV under a low bridge.

The costs resulting from a driver’s negligence can be substantial. This cover ensures that the company does not bear the full brunt of these expenses.

Vicarious Liability Cover

Vicarious liability cover is another essential insurance area, protecting recruitment agencies and umbrella companies against claims arising from the actions of their employees, contractors, or placed personnel. This is an extension to professional indemnity cover.

Recruitment agencies can be held vicariously liable for the actions of placed personnel, depending on the terms engaged and agreed with the end client where the personnel are being supplied. Should you be exposed, this cover ensures that your company is protected against such claims.

Umbrella companies, which act as employers for contractors working on various assignments, can also face vicarious liability claims. If a contractor engages in wrongful conduct while on assignment, the umbrella company could be held responsible. Vicarious liability cover provides the necessary protection against these claims.

Talk to experts in recruitment and umbrella company insurance

For UK recruitment agencies and umbrella companies, insurance is not just a regulatory requirement but a strategic necessity. It shields the business from a wide array of risks, ensuring operational continuity and fostering trust among clients and contractors.

Kingsbridge offers a range of insurance solutions for companies working in this sector, helping you navigate the complexities of the employment landscape with confidence and security. For more information, contact us on 0330 124 9590.