Article February 28, 2022

Claims scenarios: How the wording is triggered

The recruitment and staffing policy is designed to surpass expectations and to help you understand what our policy can cover for your clients, we have compiled some claims examples to show the broad range of cover.

  1. Underqualified staffing placement

    A clerical error led a staffing firm to mistakenly confirm to their client that a temporary engineering professional they had placed, held the appropriate qualifications. The hiring client required a qualified professional to assist the design team with an upcoming construction project. The hiring client alleged   that they missed deadlines due to the time taken to source a suitably qualified for the temporary engineering professional. The staffing firm had taken out CFC’s recruitment, employment and staffing policy which provides comprehensive errors and omissions under clause 1.

    Wording trigger: Insuring Clause 1: Professional liability, Section A: Errors and omissions

    Applicable to: Recruitment/temp staffing

  2. Delays due to placed personnel

    A recruitment consultant placed a software engineer at a client’s business to assist with a software integration project. Following delays to the project, which had been in part caused by the coding errors by the placed engineer, the project began to overrun, and deadlines were missed. The software company eventually had their contract terminated by their client as a result of the missed deadlines. Due to this, the software company made a claim against the recruitment consultant alleging that they were liable for the errors of the placed engineer. The software company argued that they were not supervising nor employing the engineer and that the insured, as the recruitment firm, was vicariously liable. This was disputed and the policy assisted with the claim under Section B of the insuring clause 1.

    Wording trigger: Insuring Clause 1: Professional liability, Section B: Placed personnel vicarious liability

    Applicable to: Temp staffing

  3. Failed staffing supply

    A new staffing agent agreed to supply 2,000 workers to a meat packing plant, believing that they could fulfil the quota within the time period specified by their client. Due to a major misjudgement of the labor market conditions, the staffing agent could not meet the agreed staffing levels within the period specified. This led to the client suing the agent for breach of contract for financial loss due to lost production time.  Section C of clause 1 provided support for the staffing agent, as this section agrees that CFC will compensate all sums the client is obliged to pay as a ‘direct result of any unintentional breach of a contract’. Dependent on the allegations, it is likely that Section A could also be triggered.

    Wording trigger: Insuring Clause 1: Professional liability, Section C: Breach of contract and potentially insuring Clause 1: Section A depending on the allegations.

    Applicable to: Temp staffing

  4. Confidential data leak

    In order to find suitable personnel for a major technology company, the recruitment firm was provided with confidential client information relating to the development of a major new mobile application. The staff of the recruitment company who were handling the account were made to sign non-disclosure agreements. While searching for suitable candidates, a junior employee of the firm mistakenly sent highly confidential details relating to the mobile app development, out to a large group of potential candidates. The information was then shared online, resulting in a major breach of confidentiality which set the client’s project back hugely. The firm had professional liability cover and section D of clause 1 stepped in and covered the intellectual property rights infringement.

    Wording trigger: Insuring Clause 1: Professional liability, Section D: intellectual property rights infringement

    Applicable to: Recruitment/temp staffing

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