Why is PEO Insurance Necessary?

An important part of most businesses is hiring employees to help you help your customers and hopefully turn a profit. When the business grows large enough, it may become necessary to put together a human resources department to handle the hiring of customers, as well as management of payroll and benefits. When a business decides to use a professional employer organization (PEO), the duties of human resources is basically outsourced to another company. Even though it is another company that is handling the HR part of your business, you still should consider PEO insurance for the shared risks you now have.


A Separate-Yet-Shared Organization


When you hire a PEO, a relationship of co-employment begins. Even though they are a separate entity, they are now performing actions somewhat under the umbrella of your business. Thus, the actions of the employees of the PEO are a reflection of your business, too.


Separate Liabilities


Although you might have an insurance policy that helps to cover the costs in case the actions of your employees somehow lead to a lawsuit, the PEO you hire may not necessarily fall under that same policy. The liabilities are separate, yet you can still be held liable for the actions of your PEO. As such, it is imperative that you have an insurance policy to cover you in the event of a lawsuit stemming from the actions of your PEO.


PEO insurance is necessary because although you are outsourcing your HR department, you are still responsible for the actions they make in your business’ name. Protect yourself today with the right coverage.