When staffing agencies utilize Independent Contractors to fill positions, they often need to verify that the contractor maintains specific insurance coverages protect themselves and the agency. Specific insurance needs can vary depending on the nature of the work and the industry, here are some common types of insurance that independent contractors may consider:
- General Liability Insurance:
- Protects against third-party claims of bodily injury, property damage, and personal injury. The staffing agency should require Primary Non-Contributory language and hold the staffing agency as an Additional Insured.
- Professional Liability Insurance (Errors and Omissions Insurance):
- Provides coverage for claims related to professional mistakes or negligence, especially important for those offering professional services or advice. The staffing agency should require Primary Non-Contributory language and hold the staffing agency as an Additional Insured.
- Medical Professional Liability:
- Medical professional liability refers to the legal and financial responsibility of healthcare professionals for the quality of their services and the care they provide to patients. It is commonly associated with medical malpractice and encompasses situations where a healthcare provider is alleged to have provided substandard care that resulted in harm to a patient. The staffing agency should require Primary Non-Contributory language and hold the staffing agency as an Additional Insured.
- Workers’ Compensation Insurance:
- In many jurisdictions, workers’ compensation laws do not require businesses to provide workers’ compensation coverage for independent contractors. However, the classification of workers as independent contractors or employees can be complex and is subject to specific legal criteria. If the contractors do not maintain a workers’ compensation policy, most insurers will include payments to “independent contractors” in the rating basis for the workers’ compensation premium to the staffing agency.
- Commercial Auto Insurance:
- If the contractor uses a vehicle for business purposes, commercial auto insurance can provide coverage for accidents and vehicle damage.
An important consideration for staffing agencies to further reduce their liability when utilizing independent contractors is to ensure that their liability policies include coverage for Independent Contractors in the definition of employee. This will protect the agencies in case the independent contractors’ insurance does not respond to a claim. Other coverages should be considered as well depending on the circumstances of the placements.
For more information, please contact a Marsh McLennan Agency (MMA) advisor today.