If you’re like me, you rejoiced in your newfound Saturday freedom when you first hired a landscaping crew to take care of the weekly lawn maintenance at your home. Those extra few hours on the weekend to spend with my friends and family are priceless and that money spent on the landscaper felt like the best money I’d ever spent.
Many families make this or a similar change and never once think about the insurance implications or the extra risk they are taking by inviting someone onto the property on a regular basis. Let’s explore some scenarios that you might come across and how to properly protect ourselves, our family, and our hard-earned assets against any devastating surprises.
How does home insurance cover me for hired help?
The landscaper above is just one example. Other hired help might include a weekly home cleaning service, babysitter, or pool maintenance, to name just a few. Here are a few things you should do to make sure you are protected.
Make sure they are insured: Any reputable business should carry general liability and workers compensation insurance. Worker’s compensation isn’t required in all states, but a good business will carry it to protect its employees.
- General Liability Insurance will pay for any damage the business causes to your home or injuries to your family or any other non-employee at your property. If a rock is kicked up by the lawnmower and hits your kid in the eye, this policy will cover medical bills and even a settlement. If the pool maintenance worker forgets to fill the pool back up and burns out all of your equipment, or the babysitter burns down half your home, the business liability policy will pay for the damages.
Worker’s compensation will pay the workers for any physical harm caused to them while working on your property. This is important because without this coverage, they will be more likely to sue you and cause you to file the claim on your home insurance policy if they get hurt while working at your home.
Carry high liability limits: Purchasing a higher limit of liability coverage on your home insurance is very affordable! I’ve seen the premium for the year increase by as little as $20 for the entire year while raising the liability coverage from $100,000 to $500,000. Five times the coverage for less than $2 a month is a no brainer. If push comes to shove and you do end up getting sued because someone you hired to do a job for you happened to get hurt, you want to be prepared.
NOTE: Don’t stop at $500,000 of liability coverage. Ask your agent about an umbrella policy that can raise your liability coverage much higher. You don’t have to be a millionaire to get sued like one!
Does my home insurance cover my household employees/staff?
Now that we understand some important homeowner's insurance considerations about hired help, what about those that we have help us all throughout the week? Anybody that you hire that makes the majority of their income from the work you hire them to do is going to be considered household staff and an employee of yours. This might include a nanny, estate manager, groundskeeper, driver, or cook, to name a few.
Everything we talked about above that applies to the company you hire to do some work for you now is going to apply to you, because you are now the employer! Let’s talk about each one and how you might accomplish this.
- Liability protection: Most homeowners insurance policies will allow for some household staff, but you will need to make your agent aware of how many you employ and what they do for you. Sometimes they will refer to household staff as “domestic employees”. As long as you disclose this to the insurance provider, they should be able to extend your regular homeowners insurance liability to include anything your staff will do on the property that might expose you to liability.
- There are some insurance providers that will not allow any household staff. If you fail to disclose the staff that you have to your insurance provider, you risk your provider refusing to pay out for a claim, regardless of the source. Imagine having a hail claim declined because they learn that you hid the fact that you employ staff. Be sure to let your agent know so that they can find you an appropriate policy.
- Umbrella insurance is needed. If you have staff, you need an umbrella, full stop.
Workers Compensation: If your staff is hurt while working for you at your property, the home insurance normally will not have any coverage for them. It would if they were a once-a-week type of hired help, but because they are your employees, your home insurance likely will not cover the injuries. For that reason, it’s highly recommended that you purchase a separate workers compensation policy to protect yourself from having to pay these costs out of pocket.
Employment Practices Liability Insurance - EPLI - This is a third type of insurance you can purchase to protect you against any claim a former domestic employee might bring against you for wrongful termination, discrimination, sexual harassment, or retaliation. You can purchase this coverage in a variety of ways. Ask your agent to look for a coverage option for you.
Example: You hire a nanny to watch over your two children when they are born. You build a great relationship, and you feel as if this person is part of the family. When your children reach their teenage years, you realize that they no longer need the supervision and decide to part ways with the nanny. She is appreciative of the many years of work, but sues the family for wrongful termination because it was implied that they would work for you until the kids left the home, and now they are too old to get a similar paying job elsewhere and was counting on the income.
How does home insurance cover me for live-in staff?
If you have household staff living in the home with you it will be very important to let your agent know. Some home insurance companies don’t allow staff to live in the home and will require you to find new coverage elsewhere. Consult with your agent so they can write an appropriate policy for your specific needs.
If the insurance provider allows the staff to live in the home, you’ll find that coverage will be extended for liability, damage, etc. Make sure that you add any staff living in the home as a driver on your auto insurance policy so that coverage will apply there also.
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