As a recruiter you place workers everyday – across construction sites, offices, warehouses, and everything in between – and those workers can make mistakes. A common confusion stems from thinking that you’ve handed the contractor over to the client, so surely it’s not your problem, right?
Wrong. While the client may oversee a contractor’s day-to-day, the finger could still be pointed at you if they do something wrong.
After all, you’re the one who vetted them and placed them.
The good news is that your recruitment insurance could respond to contractor actions, but it’s important to understand exactly how it does that, and the ways you’re not covered.
First: does your insurance cover contractors?
In short: no.
Your recruitment insurance isn’t designed to cover contractors, either as individuals or limited companies. They’re responsible for their own insurance, whether that’s professional indemnity, public liability, or legal expenses.
If a client claims against them for damage or financial loss, they’ll have to claim that on their own insurance.
Where your insurance could react is if your business is brought into a claim and is contractually liable for those actions as the recruiter who placed them – this is normally because you’ve agreed to an indemnity clause.
The hidden risks in contractor placements
Even though contractors aren’t your employees, their actions can still create exposure for your business in several ways. The 2 most common risks that can result in a claim include:
1. Vicarious liability
Recruiters can be held accountable for the professional negligence of workers they place. Specifically, if the contract with the end client includes an indemnity clause that makes them liable for the actions of contractors. It can include various types of claims against workers for mistakes, errors and omissions that result in financial loss for the client.
How vicarious liability insurance reacts
Your vicarious liability will extend your professional indemnity policy to cover your liabilities if a placed worker causes your client financial loss or reputational damage.
- It can: cover you for your obligations if you are contractually liable or agreed to an indemnity clause that makes you accountable for the worker’s actions.
- It won’t: cover your contractor for their negligent acts or errors while doing the job they were contracted to do.
Claim example:
A temp completes paperwork incorrectly, leading to a compliance breach the client has to report. The recruiter agreed to an indemnity clause that makes them contractually liable for the contractor’s actions. The client sues them as the supplier, pursuing compensation for reputational damage and subsequent financial losses.
2. Driver’s negligence
Driver negligence is a significant risk for recruitment agencies that supply workers for roles involving the operation of vehicles e.g. couriers, HGV drivers, food delivery drivers etc.
Most end clients may oversee the daily duties of the contractor, but if a recruiter contractually agrees to cover negligent damage to client vehicles, they could be held liable if a driver causes damage, injury, or loss while carrying out an assignment.
How driver’s negligence insurance reacts
Driver’s negligence will normally be an extension to your public liability policy, safeguarding you from financial responsibility for repairs to an end client’s vehicle if it’s damaged by a driver you’ve supplied.
- It can: cover repairs to the clients vehicle, caused by the worker you placed.
- It won’t: cover the placed worker’s negligence in operating the vehicle, or damage to third-party property (other than the vehicle) or injuries.
Claim example:
A temp driver you placed reverses a client’s van into a bollard, causing damage to the rear doors and bumper. The client claims for compensation to cover the cost to repair their company’s vehicle.
Note: if you contractually agreed with the end client to cover negligent damage to their vehicle, a drivers’ negligence agreement should also be in place between the parties outlining this.
Reducing your risk as a recruiter
While insurance provides essential protection if things go wrong, the best‑case scenario is to prevent issues from escalating into claims in the first place. Here are some practical steps that can make a difference:
- Robust onboarding –verify qualifications, check right‑to‑work documentation, gather references, and clearly outline role requirements.
- Vigorous contract checks – make sure they’re clear, accurate and up-to-date and check for specifics like indemnity clauses or driver negligence agreements.
- Ongoing contractor audits – use quick check-ins or regular reviews to confirm contractors still meet expectations, follow safety rules and hold up-to-date documents.
- Regular policy reviews – frequently check internal policies, like screening processes, data handling and insurance requirements, to keep your business aligned with current risks and regulations.
The bottom line…
You can’t control every action a contractor takes once they’re on assignment. But you can control how well your business is protected.
Recruitment insurance isn’t about covering contractors – it’s about safeguarding your agency if their actions come back to you. Understanding that distinction is key to managing your risk with confidence.
Expert support that makes a difference
Understanding risks is one thing – managing them effectively is another. Kingsbridge Recruitment works with recruitment businesses to provide insurance that reflects how the industry actually operates, backed by specialist advice, clear guidance, and ongoing support. With the right partner, insurance becomes a practical safeguard, not a guessing game.
Speak to the Kingsbridge team – they’ll be more than happy to answer your questions.
Disclaimer: Any insurance information in this article should be treated as generic guidance. Always check your policy document or contact your insurer for exact coverage details.
