If you work as
an independent consultant long enough, a lawsuit is almost inevitable, this is
especially true for recruiters. There have been several instances where a
recruiter has been sued for failing to properly vet a candidate before placing
him/her with a company. Losing a
lawsuit can put a recruiter out of thousands of dollars and even out of
business. That’s why having
E&O (errors-and-omissions) insurance is imperative if an independent
recruiter plans to secure the assets of their business over the long-term.
What is
E&O insurance?
E&O
insurance is an insurance policy that protects the insured from liability caused
by mistakes in your professional work such a candidate misrepresentation you
failed to detect or your inadvertent failure to comply with rules and
regulations. Basically, E&O
insurance will protect a recruiter from the negative consequences of honest
mistakes made during the normal course of the doing business. For example, if a recruiter failed to
do a proper background check on an attorney they placed and it turned out that
the attorney misrepresented their experience; the client may want to sue the
recruiter for professional negligence.
Well, with E&O insurance, the recruiter’s financial exposure to a
lawsuit judgment would be minimized.
While E&O
insurance is not offered by most insurance brokers, shopping around for brokers
who specialize in providing insurance for businesses will probably yield at
least a few leads.