Annual insurance review for your recruitment agency: a 5-point checklist

A yearly insurance review gives your recruitment agency the opportunity to help ensure your cover matches your real risks, not just your renewal date. Agencies face unique exposures - placing staff in unfamiliar workplaces, adapting to new regulations, or responding to changing client demands. If you need a refresher, start with what is recruitment agency insurance?.

A regular review may help you avoid common pitfalls such as underinsurance, contractual breaches, or situations where a claim might not be paid. It’s a proactive step that demonstrates professionalism to clients and helps support long-term business growth.

Quick annual review checklist:

• Has your turnover or staff size changed?
• Have you entered new sectors (e.g., healthcare, driving)?
• Are client contracts asking for higher cover?
• Are your professional indemnity limits still suitable?
• Have you added services like payroll or umbrella?

Why you should review your recruitment insurance annually

Every agency’s risk profile changes over time. Reasons you may wish to schedule a thorough review each year include:

• Business growth and turnover: More placements or expanding into new sectors might mean you need higher insurance limits.
• Sector diversification: Placing candidates in areas like healthcare, logistics, or construction brings specialist compliance and insurance needs. See what clients expect from your insurance.
• Contractual and legal changes: Clients often require proof of increased insurance or particular policy wordings.
• Operational changes: Offering services like payroll, umbrella, or executive search brings new risks, as does more staff or new technology.
• Data and cyber threats: Handling candidate data brings risks—from data breaches to ransomware. Why cyber insurance matters for recruiters.

If you do not update your insurer about key changes - turnover, staffing, new sectors - your cover might not respond as expected. For agencies with public sector contracts or large clients, outdated cover can mean missed business.

Your 5-point annual insurance checklist

1. Have your turnover or staff numbers changed?

Insurers may use turnover and headcount to set premiums and cover limits. If your business has grown, you may wish to update your details to avoid underinsurance. Undisclosed growth can sometimes be treated as material non-disclosure, which might put your cover at risk.

2. Have you entered new industry sectors?

New sectors bring unfamiliar risks and may require extra insurance. For example:

• Healthcare: Clinical negligence or regulatory risk
• Driving/logistics: Road incidents, public liability claims
• Construction: Site accidents, complex supply chain liabilities

Read what insurances a recruitment agency needs.

3. Are your client contracts demanding higher cover levels?

Clients—especially public sector or large frameworks—often require higher insurance levels:

• Professional indemnity: £1 million minimum, sometimes £2–10  million
• Employers’ liability: £5 million legal minimum, sometimes higher
• Public liability: Often £2–10 million for high-risk placements

Failure to meet these can put contracts at risk. Learn why professional indemnity insurance is essential.

4. Are your professional indemnity limits still adequate?

If you now place into regulated or high-value roles, or manage more complex contracts, you may want to review your PI limits. Consider if “any one claim” or “aggregate” limits suit your needs, and if you require retroactive or run-off cover. Find more about PI insurance for agencies.

5. Have you added new services?

Expanding into umbrella, payroll, executive search, or managed services increases exposure to:

• Vicarious liability for temps and contractors
• Cyber/data risks from digital platforms
• Contract disputes with clients or suppliers

Your insurance should reflect your full service range, not just your original business model.

Common gaps to look for in your existing cover

Many agencies only spot missing cover when it’s too late. Frequent oversights include:

• Vicarious liability: Without this, your agency might be liable if a placed temp or contractor causes loss or damage at a client site.
• Cyber insurance: Standard business insurance often excludes hacking or data breaches. Specialist cyber cover might help with legal costs, fines, data recovery, and business interruption. See how cyber insurance protects recruitment agencies.
• Drivers’ negligence: Vital if you place drivers and agree to cover damage to client vehicles.
• Legal expenses: Helpful for disputes such as contracts, compliance investigations, or employment tribunals.
• Outdated cover limits: Business growth can mean your old cover levels are no longer enough, exposing you to uninsured losses.

Beyond headline covers, technical gaps sometimes arise. For example, policies might restrict indemnity for international placements, omit regulatory investigation costs, or exclude data restoration following cyber incidents.

Not all policies respond to legal costs tied to employment disputes - especially with temporary or umbrella arrangements. You may also wish to consider fidelity cover, which can help with losses from employee fraud or dishonesty as your agency grows.

Reviewing these details regularly may help you avoid gaps in your risk management.

How Kingsbridge Recruitment Insurance makes your annual review simple

Specialist insurance for recruitment agencies from Kingsbridge Recruitment Insurance brings all key risks together under one policy:

• Professional indemnity, public liability, employers’ liability, vicarious liability, and directors’ and officers’ liability as standard
• Options for cyber, legal expenses, and drivers’ negligence to address modern risks
• Contract review, tailored advice, and updates as your agency grows
• Support for PSL and framework compliance, and sector-specific risk

All cover is underwritten by leading UK insurers and delivered by a team who understand the recruitment sector. You may want to consider a no-obligation review with a Kingsbridge Recruitment Insurance specialist. You’ll get tailored advice—whether your agency is growing, diversifying, or simply wants peace of mind.

For more detail, see what is recruitment agency insurance?

Annual insurance and compliance FAQs for staffing and recruitment agencies

What happens if a recruitment agency’s turnover or staff numbers increase but the insurer isn’t notified?

If you do not update your insurer about growth in turnover or staff numbers, your policy may no longer accurately reflect your real business exposure. This can sometimes mean a claim is not paid as expected, or even that your cover is invalid if the omission is material. Regularly updating your insurer helps keep your cover aligned with your true business activities and avoids non-disclosure issues.

Why do client contracts sometimes require higher insurance limits than the legal minimum?

Many public sector and larger private clients want reassurance that agencies can cover substantial claims—especially for professional indemnity, employers’ liability, and public liability. Contractual insurance requirements often exceed statutory minimums to address higher-value placements, regulated sectors, or complex supply chains. Not meeting these requirements could see your agency excluded from preferred supplier lists or framework agreements.

What is vicarious liability, and why is it so important for recruiters?

Vicarious liability is when your agency could be held responsible for actions taken by workers you have placed, even if they are not directly your employees. If a temp or contractor causes financial loss or damage at a client site, the client may seek compensation from your agency. Vicarious liability cover is essential, particularly for agencies placing temps, drivers, or staff in regulated industries.

Is professional indemnity insurance legally required for recruitment agencies?

Professional indemnity insurance is not a legal requirement in the UK, but it is often contractually required by clients and frameworks. Most agencies find it essential for trading and for meeting client expectations, particularly when working in regulated sectors or supplying into public sector frameworks.

Can small or new recruitment agencies buy cyber insurance?

Yes. Cyber insurance is available for agencies of all sizes, including start-ups and micro businesses. Because recruitment agencies handle sensitive data, even small firms are at risk of cybercrime, phishing, and data breaches. Many clients are now requesting evidence of cyber cover before awarding contracts.

What types of claims are most common for recruitment agencies?

The most frequent claims include:

• Negligent placement (e.g., a candidate misrepresented by the agency)
• Data breaches involving candidate or client information
• Contract disputes with clients or temps
• Vicarious liability for actions by placed workers
• Accidents involving drivers or temporary staff

A comprehensive annual insurance review can help ensure your agency is protected against these evolving risks.

How often should you review your recruitment agency insurance?

Industry experts recommend a formal annual review as a minimum, but you may also wish to review your cover after any major change—such as rapid business growth, new sectors, or new service offerings. Changes in regulations, contract types, or turnover should always prompt a fresh look at your cover.

What’s the risk of using a “generic” business insurance policy for a recruitment agency?

Standard business insurance usually does not cover recruitment-specific risks—such as vicarious liability, drivers’ negligence, or sector-specific extensions (like medical malpractice for healthcare placements). Using a generic policy can leave gaps, and agencies may find claims are not covered when most needed.

Is employers’ liability insurance compulsory for all agencies?

If your recruitment agency employs staff (including PAYE temps or admin staff), you are legally required to hold at least £5 million of employers’ liability insurance. Exemptions are rare and mostly limited to family-only or single-person businesses. Not having this cover can result in heavy fines.

What’s the benefit of a bundled insurance policy for agencies?

Bundling core covers (professional indemnity, employers’ liability, public liability, vicarious liability, cyber, drivers’ negligence) in a specialist recruitment package simplifies renewals, helps ensure no cover gaps, and makes it easier to prove compliance to clients and frameworks.

Ready to ensure your cover is still fit for purpose?

Contact Kingsbridge Recruitment Insurance today to arrange your annual review and help keep your business one step ahead.

A best-practice insurance review does more than update figures; it challenges assumptions about your risk profile and highlights new vulnerabilities - such as remote working, use of digital platforms, or complex client agreements.

Keeping your insurance fit for purpose also supports compliance with regulations and can be decisive in securing and retaining key contracts. Regular benchmarking of your cover against both market changes and your own business growth may help you remain agile, resilient, and ready for future opportunities.