Many families become so close with their nanny, au pair, or housekeeper that they can feel like an extension of the family. That isn’t surprising since a nanny can often be a part of your household for years, by your side as your family grows and for many family events. So, what do insurance companies think about nannies, au pairs, housekeepers, property managers, or anyone else you have caring for your home or family — and are they covered by your existing homeowners insurance policy?
Insurance companies think your household help is as wonderful as you do, but they don’t think of them as members of the family. Insurance is based on legal or accepted definitions and is less liberal with terms like “family.” In fact, the State of New York considers your nanny or housekeeper to be a “Domestic Worker,” someone paid by a single person or a couple to provide household services within their private home. Insurers often refer to domestic workers as “residence employees.”
Let’s look at some of the standard coverages on your homeowners insurance policy to see where there may be coverage for your nanny, au pair, housekeeper, property manager, or other residence employees. We’ll also look at where you may need to consider additional policies for proper coverage and some cases where additional coverage may be required by law.
Homeowners insurance coverages
Your homeowners insurance policy has six primary areas of coverage, coverages A through F, only some of which are relevant to your coverage regarding nannies, au pairs, or other household employees.
Coverage A, B, and C: Your property
First, coverage A, B, and C on your homeowners insurance policy cover damage to your house, damage to other structures (like sheds or detached buildings), and damage to your personal belongings.
If your residence employee damages your house or your personal property, you may be able to place a claim with your insurer to cover the damage – but this is a partial solution. Your claim is likely subject to a deductible, which will lower your claim payout and may prevent a payout at all. The deductible can rule out smaller claims because many homeowners insurance policies have a deductible of $1,000 or more.
In addition, coverage for certain types of valuables, such as jewelry, furs, silverware, computers, and similar items may be capped at a maximum coverage limit per item (and per category). Also, depending on how your policy is structured, other types of personal property may not be covered for their full replacement cost. It’s possible that this can be remedied with a rider that provides full replacement cost coverage.
In a perfect world, your residence employees will have their own professional liability coverage – but this isn’t always common.
Coverage E, personal liability coverage:
Your homeowners insurance policy also provides personal liability coverage. This can be liability due to bodily injury to others or liability due to damage to the personal property of others. In both cases, the coverage on your policy is limited to family members within your household. This is another area where your definition of family may differ from that of your insurer. Your nanny, au pair, housekeeper or another residence employee won’t be considered part of your household family, and your coverage may not extend for injuries to others or damage to the personal property of others when your employee is at fault.
Again, in a perfect world, your residence employees will have their own professional liability coverage.
If your residence employee is injured on your property – and is not on duty, your personal liability coverage may apply for your own liability, covering legal fees and medical expenses subject to the limits of your policy. In this case, coverage is like the coverage you have for any other guest visiting your home.
Coverage F, Medical payment coverage:
This coverage pays for injuries to others. A standard policy specifically excludes family members and regular residents of your home from coverage but does offer coverage for residence employees, which includes nannies, housekeepers, etc.
However, coverage isn’t provided if the employee should (by law) be covered by Workers’ Compensation coverage. In New York, domestic workers who work 40 hours or more OR who live at your home are required to be covered by Workers’ Compensation insurance. Coverage is also limited to the “insured location” and only applies to injuries directly related to employment activities your nanny or housekeeper (etc.) is performing for you, the insured.
Another thing to consider is that coverage for medical payments to others is separate from your liability coverage and typically has much lower coverage limits. As a practical matter, it’s usually only useful for the medical care associated with minor injuries.
Other coverages to consider:
Workers’ Compensation endorsement: Many homeowners insurance policies in New York State offer a Workers’ Compensation endorsement, which pays benefits due under New York Workers’ Compensation law, but only for domestic workers who work less than 40 hours a week.
Workers’ Compensation Coverage: In New York State, you’re required to purchase workers compensation coverage for your domestic workers, including your nanny, au pair, or housekeeper if they work 40 hours or more per week or if they live on your premises. Even if you aren’t required by law to carry workers compensation coverage, this coverage is often recommended for families that have residence employees because it limits the risk from related lawsuits.
Your Workers’ Compensation policy protects both you and your employees by paying for medical expenses, including rehabilitation costs and lost wages, due to injuries sustained by your employees while working for you. Additionally, an employee who is covered by Workers’ Compensation is limited in the additional suits they can bring against you as an employer. In most cases, the employee cannot sue for additional damages. However, spouses of employees can still sue, which leads us to the next coverage to consider.
Employer’s Liability Coverage: An employer’s liability policy addresses some limitations with Workers’ Compensation coverage by offering higher coverage limits for risks such as lawsuits brought by a spouse of a domestic worker for loss of consortium or loss of other services provided when the worker is disabled due to an injury.
Umbrella Policy: Employer’s liability coverage limits can be extended through an umbrella policy, which can also extend the liability coverage limits for homeowners and auto insurance policies and offer coverage for some additional types of liability not covered by your homeowners insurance. However, not all umbrella policies offer the provision to extend employers liability coverage.
Auto Policy: If your nanny or au pair is transporting your children by car, there are some additional considerations. Homeowners insurance does not cover auto accident liability. If your nanny is using their own vehicle, you’ll need to confirm that they have adequate liability coverage and not just the state minimum required limits. If your nanny or au pair is using your vehicle, you’ll want to add them to your policy as an occasional driver, also being mindful of your auto liability coverage limits.
Some of the insurance coverage concerns associated with nannies, au pairs, housekeepers, and other domestic workers can be addressed by hiring through a referral service or an agency. These services can work differently, with the workers either being employees of the service or your employees — but with the benefit of a wide bank of resources, such as available insurance coverage for professional liability and similar concerns.
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