Recruitment Public and Products Liability Insurance

Why do you need it?

You need Public & Products Liability insurance to cover you for any amounts which you become legally liable to pay as damages or compensation in respect of any Personal Injury and/or Property Damage or Advertising Injury, happening during the Period of Insurance within the Territorial Limits, that is caused by or arises out of an Occurrence in connection with your business operations.

The term ‘Personal Injury’ refers to:

• bodily injury, death, disease, sickness, disability, shock, fright, mental anguish and/or mental injury, including loss of consortium or services resulting therefrom.
• false arrest, false imprisonment, wrongful detention, malicious prosecution or humiliation.
• wrongful entry or wrongful eviction.
• libel, slander or defamation of character or invasion of the right to privacy.
• assault and battery not committed by you or at your direction, unless committed for the purpose of preventing or eliminating danger to persons and/or property.

The term ‘Property Damage’ refers to:

• physical loss, destruction of or damage to tangible property, including the loss of use of such property at any time resulting therefrom; and
• loss of use of other tangible property which has not been physically lost, destroyed or damaged; provided that such loss of use is caused by or arises from physical loss, destruction of or damage to other tangible property.

The term ‘Advertising Injury’ refers to liability arising out of:

• libel, slander or defamation of character; or
• any infringement of copyright or passing off of title or slogan; or
• unfair competition, piracy, misapproptiation of advertising ideas or style of doing business; or
• invasion of privacy;

which is related to advertising activities conducted by you or on your behalf in the course of your business operations, or by any Host Employer.

However, the term ‘Advertising Injury’ does not include any liability incurred by you which relates to the advertising activities of the Host Employer if the Host Employer’s occupation or business is advertising, broadcasting, publishing or telecasting.

You need to be covered against:

• the payment of damages or compensation awarded against you.
• claimant’s costs and expenses that are awarded against or recoverable from you.
• defence costs incurred by you or on your behalf with the insurer’s prior written consent.

Even if any of the allegations of a claim or suit are groundless, false or fraudulent, your Public & Products Liability insurance should still cover you for defence costs that are incurred by you or on your behalf in defending any such allegations that are made against you.

The allegation of a claim or suit can be made not just against you or your immediate employees but can often be made against your On-Hired Employees or On-Hired Contractors.

Due to the unique nature of your business operations, your Public & Products Liability insurance should also cover you for any vicarious liability that you may incur in respect of Personal Injury and/or Property Damage or Advertising Injury arising out of the actual or alleged acts, errors or omissions of your immediate employees, On-Hired Employees or On-Hired Contractors.

What is vicarious liability?

Here we are concerned with situations where you as an employer may be held vicariously liable in respect of Personal Injury and/or Property Damage or Advertising Injury sustained by any third party for the actual or alleged acts, errors or omissions of your:

• immediate employees in the course of their employment with you.
• On-Hired Employees and/or On-Hired Contractors while they are on-hired by you to Host Employers to work in temporary placements in workplaces or at worksites.

What are the key covers to look for?

• Cover for all your business activities. If you undertake activities outside of recruitment it is essential that you also advise us of these activities to ensure that you will be covered in the event of a claim.
• Cover for permanent and on-hired placements, as well as independent contractors.

  Where you on-hire independent contractors, your contractors will also need to have Public & Products Liability insurance cover.

  Subject to negotiation, the insurer may be prepared to extend your own Public & Products Liability insurance policy to provide cover to independent contractors themselves, but only while they are working for your recruitment agency?

  However, if the insurer is not prepared to extend your policy to cover independent contractors themselves, then the independent contractors will always need to have their own current Public & Products Liability insurance in place.

• Cover for all white collar On-Hired Employees and white collar On-Hired Contractors regardless of their activity.
• Cover for all blue-collar On-Hired Employees and blue-collar On-Hired Contractors regardless of their activity.
• Cover for all occupations and industries you work with including nursing, hospitality, accounting, engineering, labourers, mining, construction, etc.
• Principal’s Indemnity - this cover is often required by Host Employers and other Principals who require the right to claim directly upon your Public & Products Liability insurance policy in the event that any Personal Injury and/or Property Damage is caused or alleged to have been caused by your own negligence or the negligence of your immediate employees, On-Hired Employees or On-Hired Contractors.
• Cover for property in your physical or legal control - this cover is usually subject to a Sub Limit of Liability which can vary in amount from insurer to insurer.

For insurance purposes:

The term ‘blue-collar On-Hired Employee’ refers to any Employee of the recruitment agency who is an unskilled manual labourer or unqualified tradesperson and who is on-hired, on a temporary basis, by the recruitment agency to any Host Employer.

The term ‘blue-collar On-Hired Contractor’ refers to any person who is contracted to the recruitment agency under a contract for services and who is an unskilled manual labourer or unqualified tradesperson, but only whilst on-hired, on a temporary basis, by the recruitment agency to any Host Employer.

What are the common pitfalls?

Some Public & Products Liability insurance policies may:

• exclude legal liability arising out of the acts, errors or omissions of your On-Hired Employees and On-Hired Contractors.
• exclude any legal liability that you incur after you have placed a candidate in a role.
• exclude certain occupations - such as: blue-collar, engineering and nursing.
• only provide limited cover in respect of your On-Hired Employees and On-Hired Contractors by imposing a lower Limit of Liability or a higher Excess with respect to such cover.

What clauses / extensions should be included in your Public & Products Liability insurance policy?

Your Public & Products Liability insurance policy should include, among other things, the following clauses / extensions:-

• A broad definition of your ‘Business’.
• A broadly worded Insuring Clause, which among other things, includes cover in respect of ‘Advertising Injury’.
• A broadly worded ‘Defence Costs and Supplementary Payments’ clause.

  This clause should also confirm that your insurer will defend, in your name and your behalf, any claim or suit against you alleging Personal Injury and/or Property Damage or Advertising Injury and seeking damages or compensation on account thereof even if any of the allegations of such claim or suit are groundless, false or fraudulent.

• A broadly worded definition of ‘who is an Insured’ (confirming which persons and parties are covered under the policy).
• Principal’s Indemnity.
• Property in Your Physical or Legal Control - this cover is usually subject to a Sub Limit of Liability which can vary in amount from insurer to insurer.
• Property Damage to Registered Motor Vehicles in Your Physical or Legal Control - this cover is usually subject to a Sub Limit of Liability which can vary in amount from insurer to insurer.
• Cross Liabilities clause.

Optional Extensions:

• On-Hired Employees (covering your vicarious liability).
• On-Hired Contractors (covering your vicarious liability).
• Cover for On-Hired Contractors themselves (Subject to negotiation).

What are some typical claim examples

Example 1 - an On-Hired Employee damages a machine in a Host Employer’s premises causing costly repairs and two days of shutdown for the business - this loss scenario should be covered by your policy.

Example 2 - a Host Employer’s workers compensation insurer is seeking recovery from you due to an injury, caused by one of your On-Hired Employees, to one of the Host Employer’s workers - this loss scenario should be covered by your policy.

Example 3 - you arrive at your office on a Monday morning to find that a pipe in your kitchen has burst and flooded the premises of the business downstairs - this loss scenario should be covered by your policy.