How Do I Insure Domestic Employees and Contractors? (Nannies, Housekeepers, Caretakers, Landscapers, etc.)

Need some extra help around the house? Hiring domestic employees or contractors can be a great way to get professional help in and around your home. But before you hire your next nanny or landscaper, it’s important for any homeowner to know how they are insured and how you could be liable if they are injured on the job.

At Berry Insurance, we help serve clients hiring domestic employees/contractors for their home, as well as the workers themselves - so we know the ins and outs of what you need to know about properly insuring them.

In this article we’ll dive into how we recommend domestic employees and contractors be covered by insurance before you hire them, as well as common issues/insurance complications homeowners should be aware of.

How are domestic employees and contractors covered by insurance?

If you are hiring contractors to work in or outside your home, our team always recommends obtaining a certificate of insurance showing proof of general liability and workers’ compensation. Additionally, you should request that you as the homeowner be listed as an “additional insured” on the certificate.

For domestic employees, we recommend obtaining a workers’ compensation policy, regardless of whether they work under 16 hours or not. Domestic employees typically refer to any workers hired to perform household services, such as nannies, au pairs, housekeepers, personal chefs, drivers, and caretakers.

Coverage issues to be aware of when hiring domestic employees/contractors:

1: Owner-occupant of a multi-family home hiring a contractor with no workers compensation

Under Massachusetts general law c. 152, §1(5), an owner-occupant of a 1-3 family dwelling is not considered an employer when hiring repair or construction work.

So in this scenario, an injured contractor cannot file a workers compensation claim against the homeowner, because the homeowner is not the legal employer.

An injured contractor may still sue the homeowner over liability or negligence due to unsafe working conditions. If a homeowner finds themself in this situation, personal liability under the homeowners insurance policy is typically the only policy in play, subject to exclusions.

However, if the homeowner is an owner-occupant of a four-or-more family dwelling, they are considered an employer when hiring for repair or construction work. So an injured contractor can file a workers’ compensation claim against the homeowner as the legal employer, and would be responsible for the workers’ compensation coverage of any injured workers.

2: Contractor being hired is a sole proprietor, LLC, or partnership

If you are planning to hire a contractor for your latest home project that is a sole proprietor, LLC, or partnership, these individuals are not considered “employees” in the state of Massachusetts and must purchase a workers’ compensation policy for themself.

If they purchase a workers’ compensation policy, their certificate of insurance may not say whether or not they as the owner are covered or excluded.

3: Homeowners hiring domestic employees

Anyone working 16+ hours a week is considered to be an employee under the workers compensation statute, meaning workers’ compensation coverage is required for them.

Any domestic employees that are injured while working 16+ hours a week can file a workers’ compensation claim against the homeowner, as the homeowner is considered the legal employer and is responsible for coverage of that individual.

If a domestic employee is working less than 16 hours a week, homeowners are not required to provide workers’ compensation coverage but still can opt to have coverage (and it is generally advised). But domestic employees working under 16 hours a week cannot file a workers’ compensation claim against the homeowner as they are not considered their legal employer.

However, any domestic employee working under 16 hours a week may still sue the homeowner on liability or due to negligence (unsafe conditions, failure to warn, etc.). The homeowners personal liability is typically the only policy that would apply, subject to exclusions (business pursuits, worker exclusions, etc., which usually do not apply because the domestic worker is not an employee).

4: Hiring family members

A common misconception is that family members or relatives don’t need workers’ compensation when working as an employee in a family member's home. However, regardless of relation, Massachusetts law will still recognize them as employees unless they are specifically excluded.

How much does workers’ compensation coverage cost?

Workers’ compensation insurance is regulated in Massachusetts, meaning that it will cost the same from any insurance agent or company that you choose to work with. However it will vary depending on the business - or in this case the size and scale of your domestic employees duties.

Cost will vary depending on business operations, payroll, chosen limits, prior claims/experience modification rating, and more. Typically workers’ compensation for a basic nanny policy will sit around $218 a year, but can be several thousands of dollars for bigger corporations. So ensuring you have coverage for your hired domestic employees shouldn’t cost you too much, but be sure to discuss your specific rates with your insurance provider.

Protecting yourself and your workers

Hiring contractors and domestic employees can be a great way to receive professional help around the house to handle renovations or care - while giving you some extra free time! But without understanding your insurance coverage, you could find yourself in some hairy situations.

Now that you know more about how your domestic employees and contractors are covered by insurance, and what you should request or provide when hiring them, you can move forward hiring help around the house with confidence knowing how you’ll be protected.

Looking to stay ahead of the curve? Learn how to file a workers’ compensation claim when a worker is injured on your property by reading this guide: How to File a Workers Compensation Claim When an Employee is Injured.