Hired Help: Are You Covered?

Written by Andrew Freiburghouse on February 3, 2010 & Posted in Home Insurance

Having employees is great, until they try to sue you. Hopefully that will never happen to you, but if you have employees, it's not out of the realm of possibility.

That's why it's worthwhile to think about whether or not insurance would cover your hired help if anything happened to them while they were on your property.

Employee or Contractor?
The first item of business is to determine whether the employee in question is really an employee, or better classified as a self-employed contractor. The insurance requirements for an employee are much different than for a self-employed contractor.

The tests for this can be complex, but revolve around the notion of control. If you tell the person not only what you want done but how to do it, the person is an employee. It's the difference between a nanny and a landscaper. Nannies are usually given specific instructions carrying out their tasks, and their work is often supervised. Landscapers are usually given broad instructions and they perform the work their way.

Many states, such as California, require you to pay for workers compensation insurance for employees but not for contractors. For this reason, California homeowners policies frequently specifically exclude hired help from coverage under homeowners insurance.

In any event, don't assume that your homeowners insurance policy will cover incidents involving either employees or contractors. If you want that coverage, you'll have to ask (and pay) for it.

Injured Landscaper, Worried Homeowner
If you see your landscaper lying on the lawn holding his back in pain, it's not polite to have your first thought be that you are about to get sued. But for many homeowners, that's a concern.

Therefore, ask ahead of time. When you hire a landscaper, ask to see their business license and insurance paperwork, and make sure both of these are current. Same with plumbers, same with carpenters, same with everyone who comes into your house and could get hurt there.

Repeat: make sure these insurance documents are current.

Another good idea is to call your homeowners insurance agent and ask about hired help. Some injuries would be covered by the majority of policies, but many more wouldn't be, at least not without significant legal hassle. Establish the parameters ahead of time.

Protect yourself.

If You Don't Know, Ask
That brings us to the last, biggest piece of advice on this matter: ask before you hire. Ask the nanny if she has car insurance, ask the landscaper if he has health insurance, and ask your insurance agent what your homeowners policy does or doesn't cover.

It's nothing personal. It's just a part of hiring help.

Insurance Information Institute

About the Author

Andrew Freiburghouse is a writer and businessman. As a partner at Los Angeles tax preparation firm Pronto Income Tax of California, Inc., Andrew has served thousands of clients both face to face and over the telephone. Currently, Andrew lives in Brooklyn, NY, and is in the process of starting up his own tax practice.


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