When employing a household worker, such as a nanny, housekeeper, or caregiver, it's critical to cover them with the right workers' compensation insurance. Workers' comp insurance for a nanny can provide them with reimbursement for lost wages, medical treatments, and other expenses if they suffer a work-related injury or illness. If you don't provide this coverage for your household employees, just one work-related accident could set you back tens of thousands of dollars in lawsuit costs and medical bills.
Fortunately, a local independent insurance agent can help you find the best workers' comp insurance for a nanny. These agents can shop and compare policies and rates for you to find the ideal amount of coverage at the right price. But first, here's a closer look at nanny workers' comp insurance and why it's important to have.
Key Takeaways - Workers' Comp Insurance for Nannies
- It's important to have workers' compensation insurance for a nanny to protect against the cost of work-related injuries and illnesses.
- Having workers' comp coverage for your nanny can also exempt you from lawsuits for covered incidents.
- Many states mandate workers' comp coverage for nannies and other household employees, with limited exceptions.
- Homeowners insurance usually doesn't cover household employees like nannies, with very few exceptions.
- It's strongly recommended to work with an independent insurance agent, as they can help you get set up with the state-mandated amount of coverage for your nanny.
What Is Workers' Comp Insurance for Nannies and Household Employees?
Workers' comp is a type of business insurance policy designed to protect employees from hefty medical expenses and lost wages due to work-related injuries and illnesses. Household workers like nannies can get injured or become sick due to their job duties or the environment in which they work.
Watching after children or cleaning someone's home could result in many different types of injuries or illnesses. It's important to see nannies as employees and not independent contractors, and as such, you must have the right coverage for them, and ultimately yourself.
Workers' compensation insurance can reimburse nannies and other household employees for medical bills if they need to visit a doctor or hospital for a covered injury or illness. This coverage can also replace a portion of their wages, typically up to two-thirds of their standard pay, during necessary time off work for recovery. In extreme cases, when a work-related fatality occurs, workers' comp can provide a death benefit payout to the household employee's beneficiary.
Having workers' comp for your nanny is also critical, as it provides liability protection for you. If your nanny suffers from a work-related injury, illness, or fatality, providing this coverage means you are exempt from lawsuits filed by your nanny or their family members for the incident. This liability protection can save you tens of thousands of dollars or more in expensive legal defense and settlement costs.
Is Workers' Comp the Same As Disability Insurance?
Workers' comp insurance isn't the same as disability insurance. However, workers' comp coverage can sometimes provide disability benefits if a disability develops due to job duties.
Five states, including California, Hawaii, New Jersey, New York, and Rhode Island, require household employers to make payroll deductions for disability coverage and may also provide paid medical leave for nannies. This coverage provides household employees with short-term disability benefits if they can't return to work for a period of time because of an injury or illness that developed from a cause other than their job.
Why Homeowners Insurance Usually Doesn't Cover Nannies
You might think your homeowners insurance policy provides all the necessary coverage for your nanny or other household workers. In reality, home insurance and renters insurance are designed to cover third-party bodily injury or personal property damage, but not injury or illness sustained by anyone employed to work for you.
Your home insurance or renters insurance can cover other workers at your home, such as plumbers and roofers, since they are independent contractors and you are not their employer. Home insurance is also designed to cover visitors and guests.
Nannies and other household employees, whether full-time or part-time, must be covered by workers' comp. There are only two states that are exceptions to this rule. In California and New Jersey, you can add your workers' comp coverage for your nanny to your home insurance policy. Everywhere else, you'll need a separate workers' compensation policy if you employ any of the following domestic workers:
- Nannies
- Senior caregivers
- Housekeepers
- Babysitters
- Home childcare workers
An independent insurance agent or state-licensed insurance broker can help you get set up with the right amount of workers' compensation coverage for any household employees.
Which States Require Workers' Comp Insurance for Nannies?
Most states require workers' comp for all household employees. It's necessary to be aware of the workers' compensation requirements in your state. A few states only require workers' comp for full-time household employees. The table below indicates which states require workers' comp for all household employees vs. those that only require it for full-time employees.
| States That Require Workers' Comp for All Household Employees | States That Only Require Workers' Comp for Full-Time Household Employees |
|---|---|
| Alaska | Colorado |
| California | Illinois |
| Connecticut | Kentucky |
| Delaware | Michigan |
| Hawaii | New York |
| Iowa | Utah |
| Kansas | Washington |
| Maryland | |
| Massachusetts | |
| Minnesota | |
| New Hampshire | |
| New Jersey | |
| Ohio | |
| Oklahoma | |
| South Dakota | |
| Washington D.C. |
Whether coverage is legally required in your state or not, it's typically not wise to skip having workers' comp entirely. Having this coverage reduces your liability in case of an incident.
Without workers' comp, you could be held liable for the cost of a nanny's injury or illness. You might also face an expensive lawsuit that could've been avoided if you'd offered workers' comp. Further, if you're unable to compensate your household employee while they're off work recovering, they may choose not to work for you again.
The Benefits of Having Workers' Comp for Nannies
There are several important benefits of having workers' comp coverage for your nanny, including financial protection for your employee in the event of an injury, illness, or death due to their work. This coverage can provide partial wage replacement, pay for medical expenses, and even cover job rehabilitation expenses so they can return to work after an injury or illness.
Further, offering workers' comp exempts you as the employer from lawsuits filed by your nanny or their family members if there's a work-related incident resulting in harm. Providing workers' comp can also help build trust and interest from prospective nannies who would like to work for you.
Workers' Comp Penalties for Non-Compliance
Having workers' comp insurance is necessary to avoid state penalties for non-compliance. If coverage is mandatory in your state and you fail to get it to cover your household employees, you could face state fines or other penalties. You could also be held liable for the full cost of your nanny's injury or illness and their time off work.
Penalties for non-compliance vary by state. In New York, household worker employers who fail to provide workers' comp can be fined up to $2,000 for each 10-day period they're without coverage. They may also face a criminal conviction and a fine ranging from $1,000 to $50,000. Make sure to have all the required workers' comp coverage for any household employees in order to avoid harsh penalties.
How Much Is Workers' Comp Insurance for a Nanny?
The average cost of workers' comp insurance for a nanny is between $700 and $800 per year. However, rates can vary by state and a few other factors. Your household employee's job duties and your personal claims history can also impact your rates. A local independent insurance agent can help you find affordable workers' comp insurance for a nanny.
How to Get Workers' Comp for Nannies
You have several options when it comes to finding workers' comp coverage for your nanny. You can get a policy from a digital broker, go through a specialized provider, or go through a traditional insurance company.
Check with your homeowners insurance or car insurance provider to see if they offer this coverage. If you can buy more than one policy from the same provider, you may be able to get a bundling discount on each coverage to help you reduce your premium rates.
If you're unable to secure coverage privately, you can also look into state-funded coverage or assigned risk plans. This is especially helpful for residents of Minnesota, who can use Superior Point to get workers' comp coverage for household employees. An independent insurance agent can also help you find the ideal workers' comp policy for your nanny.
Factors to Consider When Buying Workers' Comp for a Nanny
When choosing your workers' comp policy for your nanny, consider the specifics of how much coverage you need, such as for medical expenses, possible lost wages, death benefits, and job rehabilitation. You'll want to shop and compare policies from several insurance carriers to find the best coverage. Consider each insurance company's service quality, including their reputation for claims support, ease of digital access, and customer responsiveness.
It's critical to understand your state's laws for workers' comp coverage. To avoid penalties for non-compliance, you'll need to have coverage in place before your nanny starts working for you.
An independent insurance agent can help you understand your state's coverage laws and regulations for workers' comp for household employees. They can also help shop and compare policies from several workers' comp carriers for you to find the best deal.
An Independent Insurance Agent Can Help You Find Workers' Comp Insurance for a Nanny
When you need the right workers' comp coverage for a nanny or another household employee, no one's better equipped to help you find it than a local independent insurance agent. These agents have access to multiple carriers, so they're free to shop and compare quotes and policy options for you.
They'll get you matched to the coverage that provides the best blend of coverage and cost. And down the road, your agent can help you update your coverage as necessary and even file workers' comp claims for you.
FAQs About Workers' Comp Coverage for Nannies
Is workers’ compensation required for a nanny?
The answer depends on your state. Many states require workers' comp for nannies who are considered employees.
What does workers’ compensation cover for a nanny?
Workers' comp usually covers medical bills, job rehabilitation expenses, partial lost wages, and death benefits. It also protects you as the employer against liability for any covered incidents.
Why doesn’t homeowners insurance cover nanny injuries?
Homeowners insurance isn't designed to cover household employees. Instead, it provides coverage for visitors, guests, and other types of workers, such as plumbers and other independent contractors. There are a couple of states with exceptions to this, however, such as California and New Jersey.
How much does nanny workers’ comp cost?
The cost of workers' comp for a nanny can range from $700 to $800 per year. However, the cost of your policy can vary depending on your location, claims history, and other factors.
How can I get nanny workers’ comp insurance?
You can get workers' comp insurance for a nanny from private insurers, specialized providers, state programs, or through an independent insurance agent.
What if my state doesn’t mandate workers' comp coverage for a nanny? Should I still get it?
Yes, having workers' comp insurance for your nanny is still important even if coverage isn't mandated by your state. This coverage can protect your nanny from hefty medical costs in the event of an incident, and also exempt you from expensive lawsuits as a result.
Are there any additional benefits to bundled services (e.g., payroll + workers’ comp)?
Yes, bundling these services with workers' comp can help simplify payroll, nanny tax handling, tax withholding, and claims management.
Sources
https://gtm.com/household/benefits-insurance/workers-compensation/
https://www.care.com/hp/nanny-workers-compensation-insurance/#wc4
https://theapna.org/
https://griffitheharris.com/workers-compensation-insurance-for-nanny/