UK recruiters expanding to the US: what you need to know about insurance

The US recruitment market beckons! For UK recruiters, it’s a land of opportunity - bigger budgets, diverse industries, and a wealth of talent. While there are resources abound on the “whys” and “hows” of entering this exciting market, one critical question often gets overlooked: have you considered your insurance coverage?

Operating in the US isn’t just about opening doors to new clients, it’s about protecting your business from risks that look very different from those in the UK. Here’s why tailored recruitment agency insurance for US operations matters - and what you need to know before you make the leap.

Disclaimer: the following is a general guide. Always read your policy documents for exact coverage details and check local laws when recruiting in different territories to be sure of your liabilities.

Why tailored insurance for US recruitment operations matters

As a recruitment business you’ve likely already got business insurance in place. And many insurance providers may offer an extension to your policy to cover your operations in America. But it isn’t as simple as just extending your UK policy. Here’s why:

• Distinct US contractual requirements - US clients often have specific insurance mandates written into contracts. These can include higher liability limits or additional cover types. If your policy doesn’t meet these requirements, you could lose out on lucrative deals.
• Territorial limits - Many UK policies only cover UK-based operations. If your contractors are working in the US - or even remotely for US clients - your coverage may not apply. Unaddressed gaps could leave you exposed to claims without protection.
• US entity & employee coverage - Setting up an LLC or Inc. in the US? You’ll need insurance that covers US-domiciled employees and complies with state-specific regulations. Each state has its own rules, so a one-size-fits-all approach won’t work.For the entities trade, you’ll also need to take out a local policy to cover your professional activities and liabilities. If your US entity (LLC or Inc.) will be a subsidiary to a UK parent company, there are options to amalgamate these covers into a UK insurance policy. You’ll need to discuss this with a specialist insurance broker (like Kingsbridge).

What to consider when getting business insurance that covers US territories

Business insurance for recruiters can be hard enough to get your head around without the added complication of US coverage. A few key considerations:

1. Policy extensions for US work

Does your current insurer extend jurisdictional and territorial limits to the US? If not, you may need to discuss your exposures with your insurance broker and whether this extension may be required.

2. Compliance with state laws

Some insurance types will be mandatory for employers’ placing workers in the US and insurance requirements vary by state – make sure you know what applies to you and your workers.

3. Higher liability limits

US litigation culture means claims can be costly. Check if your policy offers sufficient coverage for professional indemnity and other applicable liabilities.

Consider US entity vs US placements

An important thing to determine before going ahead with any major insurance upgrades is whether you’re contracting with a US entity’s UK branch or placing workers into the US.

For example, you can have a contract with a US business but be placing a UK worker into their UK branch. This would likely fall under UK jurisdiction (and UK employment law).

If you’re making permanent or temporary placements into the US for an American entity, this will likely come under US jurisdiction and North American employment law will apply.

Answering this question will help you understand what changes you might need to make to your business insurance coverage.

How does business insurance work with your contractors?

If you’re placing contractors in the US, you consider a few things:

Do contractors need their own insurance?

In most cases, yes. Independent contractors are typically responsible for their own liability coverage, particularly if they operate through their own genuine business. However, some clients may require you to ensure contractors have adequate insurance before placement – make sure you have proof of coverage if you need it.

Your responsibility as a recruitment business

Even if contractors have their own policies, you may still be legally pursued for the actions or negligence of a contractor while working in the US. You’ll want your insurer to legally defend you and look to redirect away from you in this circumstance.You need to make sure your insurance covers vicarious liability in this eventuality alongside the relevant extended jurisdiction and territorial limits into the US.

Best practices

Talk to your contractors and make sure they’re aware of any extra insurance they may need to take out. Also include insurance requirements in your contractor agreements and verify coverage before deployment if necessary.

Other key considerations for recruitment businesses operating in the US

A more litigious market

UK recruiters operating in the US market will find it involves navigating a far more litigious landscape. It’s often viewed to have a bigger ‘law-suit culture’ that’s expensive to defend – the reason most UK insurers don’t cover the US as standard.

Contractual risk transfer

Review indemnity clauses in US contracts carefully. They often shift more liability onto agencies than UK agreements. You may notice your insurance obligations include levels of cover that generally cannot be obtained in the UK insurance market like Automobile Liability and Umbrella Liability.

Tax and legal compliance

Insurance is just one piece of the puzzle. Factor in US tax obligations and employment law when planning your expansion – understand your liabilities.

Partner with a specialist broker

Navigating US insurance requirements can be complex. A broker experienced in international recruitment can help tailor coverage to your needs.

Getting guidance for your recruitment business insurance

The US market offers incredible opportunities, but only if you protect your business properly. Don’t let insurance uncertainties stall your US operations/expansion – we’re here to help!

Kingsbridge Recruitment Insurance can offer:

• US policy extensions – our Recruitment Insurance package can be extended to cover the US and Canada (upon review and approval) for placement of permanent candidates into the US. For more complex trade in the US (such as contracting in the US or even setting up a local entity), we have another proposition that can cater for your needs.
• Tailored protection – cover built for recruitment risks, not generic SME templates.
• In-house claims support – a proven record of managing hundreds of recruitment-related claims fairly and efficiently.
• Flexible options – scalable cover that adapts as your agency grows.

Our team has extensive experience helping UK recruiters secure the right insurance for US operations. Chat to our team to discuss how to ensure seamless expansion with coverage that keeps you compliant and confident. Call them on 0330 124 9590 – they’ll be happy to answer your questions!