As the housekeeper is vacuuming your living room, she trips over one of your daughter’s toys and seriously injures her back. While your neighbor’s teenage son is mowing your front lawn, he steps in a large hole and sprains his ankle. Will your Homeowners insurance cover you if one of these workers decides to file a lawsuit? Many homeowners do not realize that they could be held financially liable if a maid, landscaper, nanny, or another house worker were to suffer from an injury on their property. Here are some things you should keep in mind before you hire a home worker.
Is that worker an employee or a contractor? When you hire someone to help out around the house, you should figure out whether he or she is an employee or a contractor. This is one of the factors that determines whether or not you are liable for a worker’s injury. So, how do you know if the worker is considered your employee or a contractor? It all comes down to how much control you have over the worker.
Let’s say you hire a nanny named Lisa to take care of your children and do some light cleaning in your home. Lisa follows your instructions about how to care for your kids and how to complete certain household tasks. You provide Lisa with the supplies and tools she needs to do her job. Because you have control over how Lisa works, she is most likely considered your employee.
On the other hand, let’s say you hire a professional landscaper named Bob to fertilize and mow your grass, trim the hedges, and plant flowers in your yard. Bob uses his own lawn mower and yard tools and he does yard work for other homeowners, as well. Bob also has a team of workers who help him with his business, and he pays these workers. In this case, Bob probably would be considered an independent contractor.
Of course, these are two fairly simple examples. If you are uncertain about whether a worker in your home is considered a contractor or an employee, consult a lawyer or tax professional.
Understanding Workers Comp insurance. Some states require homeowners who have house worker employees� to carry Workers Compensation insurance coverage for them. However, even if your state does not require this, you should still consider purchasing this insurance for your employees. Why? Because if one of your employees is injured on your property, you might have to pay for their medical bills and other expenses out of your own pocket. However, with Workers Compensation coverage, the insurance company will cover the costs.
Alternatively, if you hire a house contractor, such as a landscaper, carpenter or plumber, they should be covered by their own Workers Compensation insurance. If a contractor is injured while doing work on your property, he or she will be covered under that policy. If the contractor doesn’t have enough coverage, you might be held financially liable. However, depending on the circumstances, you might be able to file a lawsuit against the contractor, as they are required by law to have sufficient Workers Compensation coverage.
If you are looking to hire a house contractor, it’s important to ensure they are covered for worker injuries, property damage, and uninstalled materials. Don’t just take their word for it. Ask for written proof that they have a contractor’s license, Workers Compensation insurance for themselves and any subcontractors, and General Liability coverage.
Know what your Homeowners insurance covers. When it comes to coverage for home workers, every Homeowners insurance policy is different. Depending on your home state, your policy might include a provision that provides limited coverage for minor workers performing lawn mowing or other tasks that require the use of power tools on your property. On the other hand, your policy might specifically exclude domestic workers such as nannies or maids. Your policy might cover the injuries of household employees, but only after a lawsuit is filed against you. Because Homeowners policies vary widely, it’s important to read through your contract and talk to one of our insurance agents before you hire a home worker.
Consider an Umbrella policy. If you discover that your Homeowners policy offers limited or no liability coverage for workers, you might consider purchasing additional Liability insurance. Although you might have some personal liability coverage through your Homeowners policy, it’s probably not nearly enough to cover a major lawsuit from a home worker. If someone were to file a lawsuit against you, you could end up losing hundreds of thousands of dollars or more-even if you win.
You can further protect yourself with what’s known as an Umbrella policy. This type of policy offers a higher level of liability coverage and ensures that you and your family will be protected if someone sues you for damages. Umbrella policies are typically sold in million dollar increments, and you can obtain a policy once your Home and Auto insurance policies meet a minimum attachment point� — typically a liability limit of $250,000 or $500,000.
Check with the Better Business Bureau. Before you hire a home worker, you should contact the Better Business Bureau for more information. They can tell you if any consumers have filed complaints against the worker. Visit the bureau’s Web site at www.bbb.org.
