Nanny Workers Compensation Insurance

Learn how this important insurance policy protects you and your nanny workers compensation insurance or senior caregiver.

nanny workers compensation insurance

What Is Nanny Workers Compensation Insurance?

After you find the right nanny or senior caregiver and come to an agreement on how much to pay, you may assume the setup process is complete. Not quite. You take on additional liability by having someone work in your home and a workers’ compensation insurance policy is the best way to protect yourself financially and legally should an accident occur. Keep reading this article to learn about:

  • What workers’ compensation insurance is
  • Why your homeowner’s policy won’t cover your caregiver
  • Why workers’ comp is important to have
  • Whether families are required to have workers’ comp

“A home doesn’t seem like a typical workspace, but when you hire a caregiver, that’s exactly what it is,”

says Tom Breedlove, Sr. Director of HomePay. “So when your nanny gets hurt while working for you, workers’ comp comes into play just like if you were to get hurt at your job.”

What is workers’ compensation insurance?

Workers’ compensation is a type of insurance policy that provides financial assistance to employees in the event of a work-related injury or illness. Typically, nanny workers compensation insurance, claims cover the cost of the employee’s medical bills and lost wages while they’re out of work. Workers’ compensation policies must be managed by a state-licensed insurance broker and families pay an annual premium for coverage.

Why wouldn’t my homeowners insurance policy cover my nanny or senior caregiver?

Homeowners insurance is designed to protect you in the event of someone like a roofer or plumber getting hurt while working in your home. It’s not made to cover employees — which is what your nanny or senior caregiver is. The only exception is in California where homeowners policies have a level of workers’ comp coverage built in. If you live in California, you should call your insurance provider to make sure your coverage is adequate or if you need to purchase a rider to your existing policy.

Why is workers’ compensation insurance so important?

Families that don’t have workers’ compensation insurance coverage have significant exposure if there is ever a workplace injury because employers are generally liable for the amount of the workers’ comp benefits. This means the employee’s medical expenses (doctor visits, rehab appointments, medications, etc.) and lost wages would have to come out of pocket. A significant accident could be financially devastating. Here is a real-life case:

A caregiver sustained a back injury in a car accident while grocery shopping for her employer.

She was unable to work for 12 weeks and her surgery and rehab expenses totaled about $15,000. Based on her average weekly wage and the medical expenses, the workers’ compensation benefits would have been approximately $18,000. However, because they didn’t have a policy, the family was forced to pay those benefits (as nanny workers compensation insurance).

In addition to financial liability, in states where workers’ compensation is required, there are substantial fines for non-compliance. Finally, workers’ compensation insurance provides legal protection because employees who accept benefits generally forfeit their right to sue the employer, regardless of fault.

Are household employers required to purchase a workers’ compensation policy?

The majority of states do require families to have a nanny workers compensation insurance policy if they hire a caregiver to work in their home. For the requirements in your state, click here. Even if your state does not require you to have a policy in place, it’s important coverage to have for the reasons mentioned above.

The good news is, HomePay can provide a workers’ compensation solution for most families. Depending on what type of household employee you plan to hire and what state you live in, our exclusive partner can write a stand-alone workers’ compensation policy. Prices vary by state and you can receive a free instant quote online, but the average cost is between $700-$800 annually if you hire a nanny. If you hire a senior caregiver, rates are based on their payroll, but free quotes are also available through our partner.

What is Workers’ Compensation for a Nanny?

Workers’ compensation for a nanny provides medical and wage benefits for their employees who are hurt or become ill on the job. It can cover a worker’s medical bills and a portion of their lost wages. It also protects you, as the employer, from liability. Workers’ nanny workers compensation insurance coverage is typically required in most industries. However, workers’ comp requirements for a nanny vary by state and may depend on the number of hours your employee works and how many workers you employ.

Workers’ compensation insurance is different from disability insurance. In five states (California, Hawaii, New Jersey, New York, and Rhode Island), household employers are required to make payroll deductions for disability insurance. These employer-paid programs provide short-term benefits to employees who are unable to work due to a non-work-related illness or injury.

In some states and cities, your nanny may also be eligible for paid medical leave. Again, these programs are different from workers’ compensation insurance.

Workers’ Comp Requirements for Household Employers

The laws around nanny workers compensation insurance are different for each state. Review specific workers’ compensation requirements by state.

States and districts requiring workers’ compensation for all household employees

  • Alaska
  • California
  • Connecticut
  • Delaware
  • HawaiiIowa
  • Kansas
  • Maryland
  • Massachusetts
  • Minnesota
  • New Hampshire
  • New Jersey
  • Ohio
  • Oklahoma
  • South Dakota
  • Washington, D.C.

States requiring workers’ compensation for full-time household employees only

  • Colorado
  • Illinois
  • Kentucky
  • Michigan
  • New York
  • Utah
  • Washington

Even in states where a policy isn’t required, voluntary coverage may be a good idea. It gives you and your nanny peace of mind in the event of an accident or illness. Your employee gets immediate financial support to help with medical bills and lost pay while you are protected financially. In some states, a policy may only cost a few hundred dollars a year.

Worker’s Comp Penalties for Non-Compliance

Non-compliance with your state’s workers’ comp requirements can be one of the biggest financial mistakes you can make as a household employer. A single work-related accident could leave you liable for tens of thousands of dollars in medical bills, lost wages, and state fines. In New York State, for example, you could face a fine of up to $2,000 per every 10-day period of noncompliance. Additionally, the fine for a criminal conviction is from $1,000 to $50,000.

Getting caught is easier than you may think. All it takes is for your nanny to get hurt while working. They go to the hospital and say the injury happens at work and open a workers’ comp claim. It will be discovered that you don’t have the required coverage. You will get fined for lacking a policy and could be on the hook for at least a portion of your nanny’s lost wages and medical costs. On top of that, you’ll need to pay for temporary care for your child or elderly loved one or, perhaps, go through the hiring process for a new caregiver.

Never assume that your nanny’s work-related injury or illness is covered under your homeowner’s insurance policy. Only in a couple of states (California and New Jersey) can you add workers’ comp for a nanny to your homeowner’s policy.

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