Employing individuals to perform work within a household creates a complex insurance matter. Many may wonder if they need to insure their home like a business to avoid coverage gaps or if their homeowner’s insurance is sufficient. Part of answering that question is to ascertain if the individual qualifies as a domestic worker.

In the eyes of the law, a domestic worker is an individual who works in another person’s home. The homeowner becomes the employer in this instance if they dictate the expected work hours, location, and process the domestic worker should follow while performing their duties. The individual also qualifies as a domestic worker if they have a contract. Examples of domestic workers include nannies, au pairs, other in-home care providers, housekeepers, and gardeners.

Homeowner’s Insurance Limitations

Employers are liable for any injuries their employees sustain, and homeowners need to insure their property accordingly. Some may assume their homeowner’s insurance will provide sufficient coverage, but such policies often have prohibitive limitations. Homeowner’s insurance may provide some coverage so long as the state doesn’t legally require the homeowner to have worker’s compensation insurance. Some states apply additional limitations, such as only providing coverage for family members. Various homeowner’s policies offer endorsements to cover domestic workers, but many only apply to employees who aren’t full-time.

Workers’ Compensation Requirements

Most states require employers to have workers’ compensation insurance, and the rules often vary by location. Without it, the individual may be personally liable, and the worker can file a lawsuit. Homeowners may not need workers’ compensation insurance under certain circumstances. For example, if the homeowner hired the worker through an agency, the company usually carries the necessary worker’s compensation insurance. Hiring someone on an as-needed basis, such as a babysitter, does not qualify as a domestic worker either.

Homeowners that must obtain workers’ compensation insurance will likely need to pay for unemployment insurance as well. It provides monetary benefits to the employee if the working relationship between the homeowner and domestic worker ends, and the employee is not at fault.

Insurance requirements and legal definitions of a domestic worker aren’t always clear. Contact Windermere Insurance Group to determine what coverage you need to prevent unnecessary risk and liability.