It is crucial to have sufficient business insurance before you start a staffing agency. You will need to have Worker’s Compensation Insurance and General Liability Insurance. On top of those insurances, it would be a good idea to consider buying a G/L policy that will also include Professional Liability Coverage, as well as Errors & Omissions (E&O) coverages. A staffing agency owner might face the greatest challenge of finding an insurance company that is knowledgeable about the staffing industry.
You will have a hard time securing the proper insurance if you don’t work with someone who is familiar with your business. One of the challenges in underwriting an insurance policy to cover a staffing firm is that you may be sending temporary employees or contract employees to remote clients. This could cause you to lose control over your employees. It would be much easier to evaluate the risk if these employees were present at your office every day. The staffing industry is complicated because your employees are often working at clients locations. This adds to the risk for insurance companies. Insurance companies are faced with a more difficult task of underwriting because employees may be required to perform tasks at clients locations that they might not perform if they were working at your office.
It would be fun to research insurance companies and find the best insurance policies. Then, it would be as enjoyable as going to the dentist. Both are essential, but they’re not very fun. You won’t be able operate your business if your staffing company doesn’t have insurance.
How can you decide how much and what type of insurance your business needs? It’s important to not be too insured, but it is also important to not be under-insured. After you have found the right partner in insurance, make sure they can recommend coverage levels and types of policies. Ask your clients to send you their standard staffing contracts if they have any staffing clients. Most likely, the contract will include a section that covers insurances. This will allow you to determine how much and what type of coverage is necessary to do business with your client.
Remember that your clients want you to reduce as much risk as possible. Your clients would prefer to have no risk having your employees working on-site at the client’s location. Consider renegotiating your contract with any potential client who is looking for insurance that exceeds what you can afford to pay for premiums. The extra premium you pay to acquire staffing business may not be worth it. If your margins are high enough and you feel confident that the client will use your services for a longer period of time, then you may want to consider increasing your insurance to grow your company.
If you’re a start-up company that employs staff, it may be necessary to purchase Worker’s Compensation from a State Fund. This is better than buying it from a private company. While the laws vary in every state, you can ask your agent if Workers Comp insurance is available from private companies. This is because it might be less costly than purchasing through the State.
In order to get an insurance quote, you will need to either estimate your sales or payroll. It would help to have a projection in mind. Do not overestimate sales or payroll. You may find yourself paying more premiums each month during the first year. This could impact your business’ profits. You may also be charged a significant premium at the end due to the withholding you have made during the year. This is a complicated calculation. Your agent will be able to assist you.