Navigating Subcontractor Insurance: Strategies for Staffing Agencies

In the dynamic landscape of staffing agencies, recent changes in laws defining employee status have presented significant challenges in managing subcontractor liability.

The nuances of subcontracted employees and their insurance requirements have become crucial considerations for staffing agencies navigating this evolving terrain, and we aim to help you determine the best option for your agency.

Understanding the Impact of Law Changes

As agencies grapple with these legal changes, it’s imperative to explore innovative insurance strategies to effectively manage subcontractor liability. Currently, most staffing agencies use two approaches to handle this component:

  1. Requiring subcontractors to carry their own insurance
  2. Altering your current coverages to include subcontracted employees under your policies.

Let’s explore the differences between these approaches and help you decide which is best for your agency.

Strategy 1: Requiring Subcontractors to Carry Liability Insurance

One common strategy is to shift the burden of insurance coverage onto the subcontractors themselves. While this approach can provide a straightforward solution, it comes with its challenges.

Managing numerous subcontractors, each with their insurance policies, can be time-consuming and cumbersome. Staffing agencies find themselves juggling various insurance documents renewals, and compliance checks, adding complexity to their operations.

Benefit and Drawbacks of This Approach:


  • You don’t pay for their coverage.


  • Time-consuming and cumbersome to track.
  • Relying on the accuracy of a manually alterable piece of paper that may falsely indicate coverage.
  • Potential limitation of your candidate pool, as requiring subcontractors to buy their own coverage may deter prospective contractors from choosing your agency over others.

Strategy 2: Structuring Policies to Include Subcontracted Employees

An alternative strategy involves integrating subcontracted employees into the staffing agency’s existing policies.

By including subcontracted workers in the agency’s coverage, the policy becomes more comprehensive, ensuring their exposures are limited and the need to monitor and manage certificates from your subcontractors is removed.

Benefits and Drawbacks of This Approach:


  • Minimal increases in premium costs are outweighed by the benefits of reducing administrative overhead and the simplicity of having one comprehensive policy.
  • Protecting your business: In case a contracted employee lacks coverage, and an incident occurs leading to a claim, your company will be liable.
  • Making you more attractive to subcontractor placements: Some subcontractors seeking placements may prefer working with an agency that does not require them to obtain and manage their insurance.


  • Some policies exclude subcontractors or have definitions of employees that remove them from coverage. If you choose this route, it is imperative to ask your agent to show you where subcontractors are included.
  • Some policies offer Additional Insureds only by contract. A recommended strategy is to implement a “Blanket Additional Insured” endorsement to your policy, including subcontractors. Ensure it does not contain language limiting it to only when required by contract to avoid potential claims.

Making the Right Insurance Decision

In the face of evolving legal definitions and the complexities of subcontractor liability, staffing agencies must carefully navigate their insurance strategies. Whether opting for subcontractors to carry their insurance or integrating them into agency policies, each approach comes with its considerations.

Striking the right balance between cost-effectiveness and comprehensive coverage is key for staffing agencies aiming to thrive in this ever-changing landscape.

Partnering with a Knowledgeable Agent

If you decide to relieve yourself from managing subcontractors’ certificates, ensure you work with an agent familiar with the staffing industry to properly structure your insurance package. You will be grateful in case an incident ever arises!

Article By: Andy Clark

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