Household workers can become injured on the job. For example, a babysitter could slip on a toy carelessly discarded by your child and suffer a back injury. After the sitter finishes yelling at your child, he or she will undoubtedly look to you to pay the medical and other expenses caused by the job-related accident.
You could be liable for such injuries. For example, you’ll normally be liable for a work-related injury to a household worker that is caused by your or family members’ negligence or unsafe conditions in your home. But, even if you’re not liable, you could still be sued by an injured household worker and have to hire an attorney and pay other legal expenses.
Paying for these expenses out of your own pocket could prove ruinous. You should have insurance to cover them. This normally takes the form of a homeowner’s insurance policy that also provides workers’ compensation coverage for injuries to household employees.
a. Coverage for household ICs
If you own your home, you probably already have a homeowner’s insurance policy since all lenders require them. Homeowner’s policies contain liability coverage that insures you if a household worker who is an IC sues you for bodily injury or property damage occurring at your home. The homeowner’s insurer will pay the costs of defending such a lawsuit and pay any damages up to the policy limits. It will also pay the injured person’s medical expenses.
b. Coverage for household employees
Injuries to household employees may not be covered by your homeowner’s policy. Such policies typically exclude coverage for injuries to employees. Instead, you have to purchase workers’ compensation insurance. This is the type of insurance that employers normally obtain to cover injuries to their employees.
If you only use ICs and never hire a household employee, you don’t need workers’ compensation insurance. Unfortunately, it can be difficult to know for sure whether a worker is an employee or IC for workers’ compensation purposes. States use different tests to classify workers for this purpose. These rules can be complex and difficult to apply. Don’t gamble that a household worker is an IC. Your homeowner’s insurer may disagree with you and claim that the worker is your employee. It will then deny coverage to an injured worker under the bodily injury and medical payment provisions of your policy.
You can usually obtain workers’ compensation coverage for household employees from your homeowner’s insurer. Your homeowner’s policy may already include this coverage. Or you may have to specifically ask for it and pay extra. Check your policy or ask your insurance agent about it. If your policy doesn’t already include this coverage, you’ll need to purchase a rider or endorsement covering household employees.
c. Renters
If you’re a renter, you should obtain a renter’s policy with this same coverage. Don’t assume you’ll be covered by your landlord’s insurance.