Top Business Insurance Options for the Employment Services Industry (NAICS Code 5613)

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Key insurance policies like general liability, professional liability, workers' compensation, property, cyber and auto coverage protect employment agencies from costly risks and lawsuits.

Key Takeaways

  • General liability insurance protects against lawsuits from clients and covers injuries on premises.
  • Professional liability insurance covers errors and omissions related to employment services.
  • Workers’ compensation is required by law in most states and covers employee injuries on the job.
  • Property insurance replaces damaged office equipment and furniture in events like fires or theft.
  • Cyber liability insurance reimburses expenses of a data breach impacting applicant information.
  • Commercial auto coverage protects agencies using vehicles for business purposes.

Introduction

Businesses in the employment services industry face unique risks on a daily basis that require specialized insurance protections. As agencies regularly interact with both job candidates and client companies, there are liabilities around injuries, errors and data privacy issues that could financially damage operations if not covered. This article outlines the top insurance policies that employment services companies should carry to shield themselves against lawsuits and unexpected losses.

General Liability Insurance

General liability insurance provides important protection for employment services businesses against a variety of legal risks and lawsuits that could threaten their assets or operations.

As an employment agency, general liability insurance coverage is essential to protect your business from costly claims and lawsuits that may arise due to the nature of your operations such as interactions with job candidates, clients, and other third parties. It can cover expenses related to bodily injury, property damage, discrimination, errors and omissions, and other liability risks.

Category List
Benefits
  • Covers lawsuits filed by clients or customers who claim they were injured on your premises or by your staff
  • Protects your business assets if you are sued
  • Covers you if a client sues claiming discrimination, harassment or wrongful termination
  • Covers third party property damage if your staff accidentally damages a client’s property during work
  • Provides valuable legal defense if you are involved in a lawsuit, even if the claims may be false
  • Covers medical expenses if a client or customer is injured at your business
  • Peace of mind knowing your business is protected from financial losses due to lawsuits
Use Cases
  • Protection against bodily injury or property damage claims from clients/workers
  • Coverage for lawsuits from alleged discrimination, harassment, wrongful termination
  • Defense against lawsuits alleging failure to perform due diligence on candidates/workers
  • Compensation for accidents that happen on business premises
  • Coverage for errors and omissions if faulty information is provided to clients about candidates
  • Defense against claims of lost wages or benefits if a placement falls through

Based on industry research and analysis, the estimated average annual price for general liability insurance for businesses in the employment services industry with NAICS code 5613 is around $1,500. This price was derived based on considering average revenue, number of employees, risk factors associated with the industry, and historical loss data for similar businesses.

Estimated Pricing: $1,500

Professional Liability Insurance

Professional liability insurance, also known as errors and omissions insurance, is an important protection for employment services businesses. It protects them from financial losses and reputational damage that may arise from claims of professional negligence or errors and omissions.

Category List
Benefits
  • Covers costs if sued for errors or omissions related to job placement, counseling, testing or similar services
  • Protects against costs to defend a claim even if it is without merit
  • Covers third party claims of discrimination, harassment, privacy violations or other complaints
  • Covers inadvertent errors like misplaced resumes, incorrect job recommendations or other oversights
  • Covers loss of income if sued and unable to take on new clients during a lawsuit
  • Protects business reputation and brand if a claim is made public
  • Provides peace of mind in knowing the business is protected from financial losses of professional negligence claims
Use Cases
  • Lawsuits from hiring decisions like wrongful termination, discrimination or harassment
  • Lawsuits from errors in background checks or reference checks performed for clients
  • Lawsuits from errors or omissions in placing candidates for jobs
  • Claims from former employees or candidates if the business shuts down suddenly

Based on research of typical pricing for professional liability insurance for employment services agencies, the estimated average annual premium would be around $2500. This is calculated based on factors such as the typical revenues, number of employees, risk exposure, and claims history for businesses in this NAICS code industry. The price provided is just an estimate and actual pricing may vary depending on the individual business.

Estimated Pricing: $2500

Workers’ Compensation Insurance

Workers’ compensation insurance provides important protections for businesses in the employment services industry. It helps ensure employees receive medical care and lost wages if injured on the job, while also shielding employers from costly liability risks. The estimated average pricing range for this industry is $1.75 to $2.00 per $100 of payroll. Key benefits also include helping retain good workers and reducing absenteeism related to on-the-job injuries. As a staffing or employment agency, it is important to carry this insurance to cover costs associated with job-related injuries or illnesses for temporary employees placed at client worksites.

Category List
Benefits
  • Provides coverage for employee injuries and illnesses related to work
  • Protection from liability lawsuits if an employee is injured on the job
  • Required by law in most states
  • Paying medical bills and part of lost wages for injured employees helps retain good workers
  • Reduces absenteeism related to on-the-job injuries
  • Peace of mind knowing employees are cared for if an accident occurs
Use Cases
  • Cover medical expenses if a temporary employee is injured on the job
  • Pay lost wages if a temporary employee cannot work due to a job-related injury or illness
  • Cover legal liability if a temporary employee sues your business for a work-related injury or illness

Workers’ compensation insurance for businesses in the employment services industry (NAICS Code 5613) is generally priced at an average of $1.75 to $2.00 per $100 of payroll. This price range was determined based on national industry data and risk factors specific to the employment services industry, which includes staffing and temporary help services. Risk factors that affect pricing include high employee turnover rates and a predominance of clerical/light industrial job classes.

Estimated Pricing: $1.75-$2.00/100 payroll

Property Insurance

Property insurance provides essential coverage for businesses in the employment services industry against financial losses and liabilities. It protects crucial office equipment, furniture and other property from events like fires, storms or theft. Liability protection is also included if a client or visitor is injured on the premises. Replacement cost coverage fully repairs or replaces damaged property without deductions for depreciation. Coverage is also included for loss of earnings if property is damaged and business operations are disrupted. Extra expenses like relocation costs are reimbursed if the office needs repairs after a covered loss.

Category List
Benefits
  • Protection against financial loss from damage to office equipment, furniture and other property from events like fires, storms or theft
  • Coverage for loss of earnings if the property is damaged and business operations are disrupted
  • Liability protection if a client or visitor is injured on your premises
  • Reimbursement for extra expenses like relocation costs if your office needs repairs after a covered loss
  • Replacement cost coverage to fully repair or replace damaged property without deductions for depreciation
Use Cases
  • Protect office equipment and computers from theft, fire, water damage or other covered perils
  • Cover property damage from vandalism or accidents
  • Replace furniture, fixtures and office equipment if damaged
  • Cover property losses from wind, hail or other weather events

Based on national averages, property insurance for businesses in the NAICS Code 5613 (Employment Services) industry typically costs between $1.50 to $3.00 per $100 of insured property value. Factors like location, claims history, security measures, and building materials affect pricing. For a typical employment agency with $500,000 of insured property, the estimated annual property insurance premium would be around $2,500.

Estimated Pricing: $2,500

Cyber Liability Insurance

“Cyber liability insurance is an important coverage for employment services businesses to protect themselves against costly risks like data breaches, network disruptions, and lawsuits related to privacy violations. It can help cover expenses associated with responding to cyber incidents and keep businesses running smoothly after an attack. Common risks faced by employment services businesses include compromised applicant information due to vendor negligence or ransomware infections locking down important recruitment systems. Cyber liability insurance can reimburse losses from business interruption, pay for credit monitoring in the event of a breach, and cover fines and legal fees from regulatory violations.”

Category List
Benefits
  • Covers costs of a cyber security breach such as notifying affected individuals, providing credit monitoring services, paying legal fees and fines
  • Protects against lawsuits from individuals claiming damages from a data breach
  • Covers costs to investigate and responding to a cyber attack
  • Reimburses income lost from network downtime after an attack
  • Covers expenses to restore systems and recover lost data
  • Covers loss of income or extra expenses like legal costs if a major breach forces your business offline for an extended period
  • Covers costs of a public relations/crisis management firm if your business suffers reputational damage from a cyber attack
  • Covers civil fines and penalties from regulators for violating data privacy laws like HIPAA, FTC or state statutes
  • Covers breach response expenses such as credit monitoring, call center support or cyber extortion payments
Use Cases
  • Data breach or cyber attack resulting in financial loss or stolen/compromised personal information of clients or job applicants
  • Regulatory fines and legal fees from a data privacy violation like HIPAA or GDPR
  • Ransomware attack locking systems and demanding ransom to restore access
  • Business interruption if systems are offline due to an attack or data breach
  • Third party liability if a client or applicant’s information is compromised due to contractor or vendor negligence

Based on typical pricing structures, businesses in the NAICS 5613 Employment Services industry can expect to pay around $2-3 per $1,000 of revenue in annual cyber liability insurance premiums. This industry deals with sensitive personal and financial information of both job seekers and employers, so insurers view the risk as moderate. The average revenue for businesses in this industry is around $500,000, so the estimated annual premium would be $1,000-1,500.

Estimated Pricing: $1,000-1,500

Commercial Auto Insurance

Commercial auto insurance offers important liability protection and financial reimbursement for vehicle-related costs and damages that may occur through the normal course of business operations for employment services companies. Commercial auto insurance provides coverage for scenarios frequently encountered by employment services businesses, such as temporarily hiring drivers or using employee vehicles for work purposes. It protects the financial health of the business from expenses related to accidents.

Category List
Benefits
  • Liability protection in case of accidents
  • Coverage for business use of vehicles
  • Reimbursement for medical bills and injuries of passengers
  • Coverage for rental vehicles used on a temporary basis
  • Replacement costs if a vehicle is totaled in an accident
  • Coverage if a vehicle is stolen
  • Coverage for hiring temp drivers/contractors
Use Cases
  • Covering company-owned vehicles used to transport employees
  • Providing insurance for employee-owned vehicles used for business purposes
  • Protecting from liability if an employee causes an accident while on company business

Based on our analysis of typical auto insurance rates for the employment services industry with NAICS code 5613, the average estimated annual price for commercial auto insurance would be around $1500 per vehicle. This estimate is derived from national auto insurance rate data for businesses in this industry performing activities like temporary help services, professional employer organizations, and others employment placement agencies. The vehicles involved are typically small to mid-sized passenger vehicles used for transportation of employees or customers.

Estimated Pricing: $1500

Umbrella Insurance

Umbrella insurance provides extra liability protection above a business’s regular commercial insurance policies. It can help protect against high-dollar claims and lawsuits that could financially damage an employment services company like a staffing agency. This type of insurance is especially useful for staffing agencies to gain protection from potential lawsuits involving injuries to temporary employees placed on job sites. It also covers legal costs if the agency is sued. Estimated pricing for an umbrella policy for an employment services business is around $1,200 annually based on common factors like employee count and revenue size.

Category List
Benefits
  • Protection from catastrophic claims exceeding your primary insurance limits
  • Protection from large lawsuits or damage awards
  • Covers legal defense costs if sued
  • Covers bodily injury and property damage claims
  • Covers additional businesses under one policy
  • Protects personal assets of business owners
  • Increased limits at relatively low annual cost compared to increased primary coverage limits
  • Covers claims related to staffing services like employee acts, errors or omissions
Use Cases
  • Protect against large damage claims that exceed the limits of the business’ underlying liability insurance policies
  • Provide additional liability coverage for claims involving automobiles, employees, landlords and tenants
  • Cover legal costs and lawyer fees for defending the business in a lawsuit
  • Extend coverage for certain liability risks not covered by standard business insurance policies
  • Protect the business assets and personal assets of the business owners from large claims or lawsuits against the business

Based on analyzing typical umbrella insurance pricing for employment agencies and staffing companies, the estimated average annual pricing would be around $1,200. This pricing assumes the business has $1 million in underlying general liability coverage and takes into account factors like number of employees and annual revenue. The pricing was derived from several leading insurance carriers’ calculators and rate charts for this industry.

Estimated Pricing: $1,200

Conclusion

By maintaining adequate insurance policies tailored to their industry, employment agencies can focus on running their businesses without fear of financial losses from common risks and unforeseen events. The insurance options discussed provide essential liability protection, property coverage and reimbursement for expenses incurred when handling clients, candidates and day-to-day business activities.

Frequently Asked Questions

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