Insurance for recruiters and headhunters businesses

When you are providing services to customers as a recruiter or headhunter, you need to protect yourself against all possible risks by taking out the right Recruiters and Headhunters insurance.

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Ask yourself the question – can you afford to take the unlimited risks that go hand-in-hand with a business like yours.

Insurance for recruiters and headhunters businesses

Remember this – there is a simple and affordable alternative readily available. In the following few paragraphs, we will try to outline just what those risks are, and highlight the available protections that you can and should have.

It’s important to know that the risk goes along with the form of business, regardless of whether you are operating as a self-employed consultant, a freelance entrepreneur, or have a recruitment agency. There is the same need for all the covers we talk about below.

Recruiters and headhunters need insurance because the work you are doing affects your customers’ business results and impacts individual peoples’ lives.

This means the stakes, and the risks that go along with them are high. 

As a consultant and advisor, you need to consider the liabilities you are facing. Like any business, you also need to protect your assets, covering the value of any physical property and equipment you have invested in.

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Finally, just like any business, you have some mandatory obligations that are set out in the relevant federal and State laws.

Liability of recruiters and headhunters

Any business that has face-to-face interactions with people, whether they are your customers, or simply members of the public, faces the risk of accidents happening to these people that can be deemed to be your fault. For protection, you need to carry General Liability insurance.

Any time a customer steps foot onto your domain, which could be your office or home, you can be held legally responsible for any damage or injury they incur attributable to you. 

A typical example is if you have just completed washing down the stairs entering your office.

Suppose just then someone – not necessarily a customer – slips and falls on entry, either injuring themself, or damaging their personal property, or both.

Slip-and-fall claims amount to more than ten percent of all small business insurance cases, and they can easily run up to $10,000 or more. Injuries can require medical attention, hospitalization, rehabilitation and more.

As well, you can be held responsible for physical damage to the person’s property. So if the person who slipped was carrying something valuable that was damaged or broken, you will also be liable for repair or replacement.

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Because you are providing advice to your customers in return for payment, you are automatically liable to deliver proper and professional services thoroughly and correctly.

In your case, you are dealing with people’s essential livelihood.

This can make you especially vulnerable to claims that something you did was improper or unprofessional. What is needed for protection is Professional Liability insurance (also known as Errors and Omissions insurance / E&O insurance).

A simple error while you are working with a customer’s request can result in a substantial setback. To recover the losses, they could decide to sue you.

Professional liability insurance provides liability coverage coming claims from alleged work mistakes, undelivered services, and professional negligence.

You are sensitive to claims that a delay had on your client. For example, if the client is launching a new product line, and has booked TV and radio time, and engaged you to find presenters that met their exact needs by the launch date.

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If you were unable to find suitable people, even if the specifications turn out to be unrealistic, you are still liable because you undertook the work

Even if in the end you can prove that you were not the one at fault, an accusation can be costly. 

Probably the most significant area of vulnerability for headhunters and recruiters is an allegation of professional negligence.

Customers come to you with high expectations. Suppose for any reason your performance doesn’t quite live up to their expectations. In that case, you could be accused of negligence or incompetence. Suppose the quality of your professional service is challenged.

In that case, professional liability insurance is the only way to ensure that you are not yourself going to have to defend the case, and carry the results.

Another example would be if you failed in interviews of candidates to get full and accurate information. Suppose the client acts on your recommendation but finds out that the candidates hid essential information from you. In that case, the liability is yours, not the candidates.

One of the most extensive benefits of liability insurance is that you are not going to be the one defending the claim. In the event of a lawsuit, the insurance company must assemble the defense, front up in court, meet the court-ordered judgment, or reach a settlement.

Asset Insurance

Just like any business, there are risks to your physical assets, coming from storms, fire, vandalism or theft.

Equipment Insurance covers you if any equipment you use, such as office furniture, computers, printers and all other common assets, are stolen or damaged.

Commercial vehicle insurance is essential if you are using your personal auto to travel between places of work. Remember that your own private insurance policy does not cover you in any circumstances if you have an accident, and may not even protect you from vehicle theft if the auto was last used for work.

Mandatory Insurances

In most states, you do not have the option to take out cover for workers compensation insurance.

You must have the cover if you employ more than the specific number of workers, regardless of whether they are full time, part-time, casual or subcontractors. The cost and specified number differs from State to State.

Suppose you are using a private auto for business purposes. In that case, you must have third-party vehicle insurance to cover bodily injury and property damage to other people. Check with local brokers or insurance companies to see what is required.

How much is insurance for headhunters and recruiters?

The charges depend primarily on the level of protection you require. 

Insurance for your assets, like the equipment, depends on the value of anything that can be damaged, stolen or vandalized. Remember that equipment insurance pay-out is calculated on depreciated cost. This may not meet the replacement cost. 

Your own State sets mandatory insurance costs for Workers Compensation insurance and third-party vehicle cover. 

How to estimate the cost of insurance for recruiters and headhunters

Several service providers do the same kind of work for customers as recruiters and headhunters.

You can use as a guide what we have written about the usual costs for insurance for Social Media, Health coach, Yoga teachers, Tennis Coach, DJ, Swimming teachers and Software Developers.

Below are very general guides to the required levels of coverage and the premiums you should expect to pay.

Subject Level of cover Likely average cost per year
General liability $1 million per year, maximum $500,000 single claim $425 – $650
Professional liability $100,000 full year, $20,000 single claim with $2000 deductible $1250 – $2350
Equipment Calculated on insurable value (IV) with $250 deductible  $150 – $250


What kind of insurance does a recruiter need?

Like all professional service providers, the most severe risk for a recruiter or headhunter is in the areas of professional liability. Due diligence, and professional competence, are assumed by the law, and claims can be made of work mistakes, undelivered services, professional negligence. 

Apart from professional liability, all businesses face the same risks of general liability in case of injury to third parties or loss of third-party property, the risks to your own assets, and mandatory cover for Workers Compensation.

Should recruiters take out business insurance?

All businesses that are providing services to customers face substantial risks. Although you can choose not to have insurance, it’s basically a question of whether it’s worthwhile facing unlimited risks, against the known and very reasonable cost of insurance.

What is the leading risk for a headhunter’s business?

Professional liability is the most significant risk for recruiters and headhunters. Dealing directly with people’s lives and livelihoods, as well as your customers’ financial bottom-line results, makes the outcomes of your activity highly sensitive.
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