If you are planning on hiring a nanny, housekeeper or gardener for your home, you need to make sure that you have the proper insurance in place.
If you are hiring someone on a permanent basis, whether they are working full-time or part-time, it’s quite likely that you would be required to secure workers’ compensation coverage for them.
But that will depend on the amount of work they perform, how often they work at your residence – and the nature of that work.
In some cases, a homeowner’s policy would cover them for any accidents they may have at your home. But it all depends.
There are actually two main risks that you are assuming when you hire a domestic worker:
- The risk to them sustaining an injury while working for you.
- The risk of them causing injury to a third party or the property of a third party.
Before you engage a nanny or housekeeper, you should review your homeowner’s insurance policy to understand what coverage is available in case the worker is injured while working for you.
Some injuries might be covered under your homeowner’s insurance. But you will probably have to pay a deductible, and your policy limits might not be sufficient to pay all damages.
All California personal property insurance policies are required to include automatic coverage for “occasional” employees. In such cases, the personal liability and medical expense portion of your homeowner’s policy can be extended to cover injuries to residence employees.
But beware, as some policies have exclusions for injuries sustained by domestic employees or independent contractors performing work at your residence. Read your homeowner’s policy to see what it says about such situations.
In some states, such as California, certain domestic workers are considered employees who are eligible to receive workers’ compensation benefits in accordance with state law.
But, if they are working regularly for you on a full-time basis, you would be required under state law to secure workers’ comp coverage for the employee.
Insurance companies typically use the following to describe a “full-time” employee:
- An inside employee (nanny, housekeeper, etc.) working over 20 hours per week.
- An outside employee (gardener, pool cleaner, etc.) working more than 10 hours per week.
Note: Under 10 hours per week is typically considered an “occasional” employee.
Also, under California insurance code, in order for coverage to apply to a residential employee, the following must apply:
- Within the 90 days immediately prior to the date of injury, the employee must have been engaged in employment by you for no less than 52 hours.
- The employee must have earned no less than $100 in wages.
Purchasing a stand-alone workers’ comp policy for just one domestic employee is difficult at best. Fortunately, most insurers will sell you a workers’ compensation endorsement to your homeowner’s policy.
If you don’t purchase this endorsement – known as the HO-90 form – you would be opening yourself up to significant liability should the worker be injured while working for you.
The HO-90 form provides coverage on a very limited and specific basis for residence employees. You must inform us or your insurer about the extent to which you have employees working in your home, so it can be priced into the endorsement properly.
Risk of not securing coverage
If you do have someone working for you on more or less a permanent basis, they would be eligible for workers’ compensation benefits if they were injured while doing so.
In that case, if you didn’t secure a workers’ comp endorsement, you’d be facing significant liability, since your homeowner’s policy would exclude the claim.
Besides being liable for the cost of the medical care, if the employee missed work for any amount of time, you’d also be liable for the workers’ comp wage-replacement benefits they are entitled to receive under state law.
Furthermore, you would likely be subject to fines by the state for not covering your worker.
If you have any questions about domestic workers, don’t hesitate to call us! We can answer any queries you may have.