Professional Indemnity Insurance - Recruitment

Professional Indemnity (PI) insurance for recruitment companies protects you if a client claims you caused them a financial loss due to your professional services.

Here’s a clear, practical breakdown

What it covers (for recruiters).

PI insurance typically covers claims arising from:

• Negligence – e.g. placing an unsuitable candidate who causes loss
• Misrepresentation – inaccurate CVs, qualifications, or experience
• Breach of contract – failing to meet agreed recruitment terms
• Errors or omissions – missing background checks, right-to-work issues
• Confidentiality breaches – mishandling client or candidate data
• Defamation – negative references or comments causing harm

It usually pays for legal defence costs and compensation/settlements.

 

Who needs it?

Professional Indemnity is strongly recommended (and often contractually required) for:

• Permanent recruitment agencies
• Temporary & contract staffing firms
• Executive search / headhunters
• IT, finance, healthcare, and specialist recruiters
• Solo recruiters and large agencies alike

Many clients will not engage a recruiter without PI cover.

 

What affects the cost?

Premiums are influenced by:

• Turnover
• Type of recruitment (e.g. healthcare & financial roles cost more)
• Contract vs permanent placements
• Geographic reach
• Claims history
• Level of cover required

Small recruitment firms often pay a few hundred to a couple of thousand per year, but it can be higher for higher-risk sectors.

 

What PI does not usually cover

• Employee disputes (needs Employment Practices Liability)
• Cyber incidents (needs Cyber Insurance)
• Bodily injury or property damage (Public Liability)
• Deliberate wrongdoing or fraud
Most recruitment businesses combine PI with:
• Public Liability
• Employers’ Liability
• Cyber Insurance