A truck might belong to the client, but an accident claim can still end up on the staffing firm’s desk. A temporary employee behind the wheel is one reason. The client service agreement is another. When reviewing hired and non-owned auto insurance, or HNOA, agents need to determine whether the policy addresses the liability the staffing firm may face or has agreed to assume.
Why a Client’s Vehicle Can Become the Staffing Firm’s Problem
Staffing firms don’t need their own fleet to face auto liability claims. Employees may use personal cars for business errands or operate vehicles belonging to the companies where they’re assigned. When an accident involves a client-owned vehicle, two issues come into play:
- Liability for the accident: If a temporary employee causes a collision while making deliveries in a client’s van, an injured driver may pursue a claim against the client, the staffing firm, or both, depending on the facts and applicable law.
- Responsibilities under the client agreement: The staffing firm may have agreed to indemnify or defend the client against certain claims involving its employees. Those obligations could lead to a demand against the firm even if its legal responsibility for the accident is disputed.
Vehicle ownership alone doesn’t determine liability. Agents also need to consider what responsibilities the staffing firm has accepted under its client agreement.
What Did the Staffing Firm Agree To?
A staffing firm may consider a placement relatively straightforward until an agent examines the client agreement. A position described as warehouse work, for example, might include driving company vehicles between facilities or making deliveries.
Before evaluating coverage, agents should compare the written agreement with the employee’s assigned duties. Pay particular attention to:
- Indemnification: Has the staffing firm agreed to reimburse the client for claims involving its employees? Does the obligation extend beyond the firm’s own negligence?
- Defense obligations: Does the agreement require the staffing firm to defend the client against specified claims?
- Insurance requirements: Must the firm provide particular liability limits, additional insured status, or primary and noncontributory coverage?
A requirement to carry auto liability insurance doesn’t necessarily mean the policy will cover all obligations the staffing firm assumes.
Agents should also ask whether employees operate client vehicles outside their original job descriptions. An account that involved no driving at the beginning of the policy period may have different exposures at renewal.
Will the HNOA Policy Meet Those Obligations?
The client agreement may require the staffing firm to assume liability that its HNOA policy doesn’t cover. For example, a policy might protect the staffing firm when an employee causes an accident in a client-owned vehicle without extending protection to the client’s liability.
World Wide Specialty Programs addresses this potential coverage gap through its HNOA program, which offers protection for both the staffing firm and its client against qualifying third-party bodily injury and property damage claims.
Agents should compare the client’s indemnification and defense requirements with the policy’s insured definitions, exclusions, and limits. Since business auto insurance treats owned, hired, and non-owned vehicles differently, the review should also account for which vehicles employees operate.
For employees driving personal cars on assignment, non-owned automobile insurance may address the staffing firm’s liability. Damage to a rented vehicle is a separate coverage issue and may require a hired auto physical damage endorsement.
Don’t Let the Contract Get Ahead of the Coverage
A client agreement can change a staffing firm’s financial responsibilities without changing its insurance policy. New driving assignments can create the same concern.
World Wide Specialty Programs requests details of client driving exposures and client service agreements when evaluating HNOA submissions. Agents should use those documents to identify obligations that need underwriting review before making coverage representations.
Get in touch with us to discuss your staffing clients’ auto liability exposures and available coverage options.
About World Wide Specialty Programs
For the last 50 years, World Wide Specialty Programs has dedicated itself to providing the optimal products and solutions for the staffing industry. As the only insurance firm to be an ASA commercial liability partner, we are committed to that partnership and are committed to using our knowledge of the industry to provide staffing firms with the best possible coverage. For more information about Staffing Professional Liability Insurance or any other coverage we have available to protect your staffing business, give us a call at (877) 256-0468 to speak with one of our representatives.