US · Compliance
How do you choose insurance limits for a staffing agency?
A practical way to set workers' compensation, general liability, professional liability and umbrella limits before client procurement.
The short answer
Start with the limits your target clients require, then test them against the roles and payroll you will place. Workers' compensation follows state and classification rules; general liability and professional liability are contract-driven. A new agency commonly needs at least $1m per occurrence liability, but the right limit is the one supported by your work and client contracts.
Key facts
- Common enterprise baseline
- $1m per occurrence liability, subject to contract
- Most variable premium
- Workers' compensation by job class and payroll
- Add when required
- EPLI, cyber, auto, umbrella and crime/fidelity
Insurance should be designed backwards from the work you intend to place. A clerical agency, a travel nurse agency and a construction labour supplier expose clients to different operational risks and will receive different schedules in their contracts.
Read the client's insurance requirements before you quote the bill rate. Limits, additional-insured wording, waiver of subrogation and notice provisions can change the premium and can delay onboarding if the broker cannot issue the certificate in the required form.
Workers' compensation is not a single policy number. The premium responds to payroll by classification, state and experience rating, so a fast change from office roles into industrial roles can invalidate the burden in your rate card.
Professional liability covers errors in the service or placement; EPLI addresses employment claims; cyber responds to a different exposure. Do not accept a broker's bundle without asking which real risk each section addresses and what exclusions your client contracts leave behind.
Review limits at every material client win, new state and new niche. Underinsurance discovered during a claim is too late, and overinsurance that destroys your pricing is also avoidable with a focused review.
United States
How this differs by US state and metro
The answer above holds nationally. What changes locally is registration, insurance, wage rules and how much cash each contractor consumes — these are the states and metros founders ask us about most.
Pennsylvania
Philadelphia · Pittsburgh · Allentown
Local earned income tax and, in Philadelphia, the city wage tax must be withheld correctly from the first payroll
Pennsylvania guideNorth Carolina
Charlotte · Raleigh–Durham · Greensboro
Research Triangle clients run longer contract assignments, which is good for margin stability and heavy on working capital
North Carolina guideSouth Carolina
Charleston · Greenville · Columbia
Manufacturing clients demand safety records, site inductions and often drug screening programmes
South Carolina guideNew York
New York City · Brooklyn · Long Island
New York wage notice and pay statement rules are strict and enforced — get pay stubs and notices right from the first contractor
New York guideMetro-level wage, bill rate and startup cost detail:
Local questions
Does this change if I start in Pennsylvania?
The national answer holds. What changes in Pennsylvania is local: Local earned income tax and, in Philadelphia, the city wage tax must be withheld correctly from the first payroll Check the Pennsylvania page before you register anything, and model the cash gap on Pennsylvania pay rates rather than national averages.
Is the answer different in North Carolina than in Pennsylvania?
The economics are the same shape; the local detail is not. In North Carolina: Research Triangle clients run longer contract assignments, which is good for margin stability and heavy on working capital That affects your registration checklist and your working capital number, not the underlying principle.
Which US cities does this apply to?
All of them — but we publish metro-level bill rate, wage and startup cost detail for Philadelphia, Pittsburgh, Charlotte, Raleigh–Durham and more, because pay rates and buyer mix vary far more between metros than between states.
Do I need a separate licence in every state I place in?
You register where you have employees and where you do business, not once nationally. Most states require unemployment insurance and withholding registration plus workers' compensation cover; a minority licence employment agencies, and some cities — New York City among them — licence separately from the state. Confirm each state and city before your first placement there.
Sources
General information for recruitment and staffing founders, not legal, tax or accounting advice.
Go deeper
How to start a staffing agency in the US
A step-by-step guide to starting a US staffing agency: entity and insurance, working capital for payroll, first niche, margin maths and the funding route that fits.
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