$5M Professional Liability (E&O) Insurance for Staffing Agencies

Staffing agencies with a $5M Professional Liability (E&O) requirement can meet it with one $5M primary policy or a smaller primary plus follow-form excess layers.

What does a $5M requirement mean for staffing agencies?

Professional Liability (E&O, short for Errors and Omissions) covers claims that a mistake in your services cost a client money, such as a screening or placement error. A clause might read like this:

• Per claim and aggregate: $5M is the most paid for one claim and for all claims in a policy year.
• Claims-made: Professional Liability almost always covers claims made while the policy is active, for work after the retroactive date (the earliest covered work date).
• Primary plus excess: if your clause is silent, confirm with the client that primary plus follow-form excess meets it.

Who asks staffing agencies for $5M?

Most clients ask for $1M, $2M or $3M. $5M is much less common. It often comes from:

• Very large employers with one insurance schedule for every supplier.
• National managed service provider (MSP) programs, where one program-wide insurance schedule applies to every supplier agency.
• Banks, insurers and investment firms.
• Large IT and data projects. If your workers deliver technology services, the client may also ask for Technology E&O. See Technology vs Miscellaneous E&O.
• Some government agencies and prime contractors set high limits in the bid for larger contracts, though $1M to $3M is more typical.

How is $5M Professional Liability built?

Which structure fits depends on the markets willing to write the account and how much limit each offers on one policy. Compared with $3M, $5M is more likely to need more than one policy. At $10M, layers are usually needed.

A primary policy pays first. An excess policy pays only after the layer below it is used up. "$2M xs $3M" means a $2M layer that sits above the first $3M.

Each excess layer should follow form, meaning it uses the same terms as the primary. If one layer leaves out claims caused by placed workers, you may have $5M on paper but less when a claim comes in. Every layer should share the same retroactive date, policy period and named insured (the business covered). A commercial umbrella almost never covers Professional Liability (here is why).

If you already carry a lower limit, Morrow can request new quotes for a $5M primary policy or excess layers, keeping your retroactive date and prior acts coverage (coverage for earlier work) where the market allows.

What will underwriters ask staffing agencies for?

An underwriter decides if a carrier offers coverage. Expect questions on:

• Revenue by service line: temporary staffing, direct hire and payrolling.
• Revenue by industry, how many placed workers handle client money or sensitive data, and who supervises them.
• Your screening steps, and whether an outside company runs background checks.
• Revenue share from your largest client or MSP program, and its indemnity terms (who pays if something goes wrong).
• Loss runs (your claims history report), your current policy and retroactive date.

What affects the cost of $5M Professional Liability?

• Placement mix. Finance, IT and other high-access roles usually cost more to insure than clerical roles.
• Revenue and structure. More placements mean more exposure. The primary layer usually costs the most per $1M of limit.
• Claims history. Past claims can raise the price or lower the limit offered.
• Retention. This is what you pay on each claim before the policy pays.

Frequently asked questions

What kind of claim could reach $5M for a staffing agency?

A screening or placement error that costs a client a large sum could, in some cases. Here is a hypothetical example. A client says a placed worker's screening missed a step for a role with access to client funds, and the client loses money. Legal fees and a settlement can add up fast. Theft itself is often covered by a separate crime policy with employee theft of client property coverage that includes placed workers. A negligent screening claim may fall under Professional Liability, depending on the wording.

Can a small staffing agency get $5M Professional Liability?

Sometimes, but the smallest firms are often offered lower limits. Mid-sized and larger firms with clean loss runs (claims history reports) may build $5M with excess layers above a $1M or $2M primary. Small firms may face a $5M program that costs a lot compared with their revenue. A $5M limit is very rare online and almost always needs a broker. Morrow can help you find it.

Can my client be added as an additional insured on my staffing agency's Professional Liability?

Usually not. Most Professional Liability forms do not allow it. Some carriers may allow it in limited cases. A certificate of insurance that lists every layer, with each limit and policy period, is the usual evidence of coverage. The policy wording controls, not the certificate.

This article is general information, not legal advice or a coverage determination. Coverage depends on the actual policy wording, carrier underwriting and your contract terms.