We all require help at home every now and then, and in some cases that help may be long term. Residence employees such as gardeners or housekeepers are just that – employees. So what happens if your residence employee gets injured on the job?
Defining “Residence Employee”
Insurance companies define a residence employee as someone who performs non-business duties related to a residence. The definition even applies to those employees who perform comparable non-business duties away from the residence premises.
Who is a residence employee?
- Full time workers hired by a homeowner inside or outside the home. Please note that in many states “full time” is anything in excess of 20 hours a week.
- Part time workers hired by a homeowner for smaller jobs. The kid who mows your lawn once a week, or the babysitter who comes over for date night is considered a part time residence employee.
- Employees who perform comparable duties away from home (such as an errand runner) or at a secondary home (caretaker) are also residence employees.
- The landscaping company, house painter, handyman or plumber that you hire once or twice a year, especially if you don’t verify that they are licensed and insured.
Your Homeowners Insurance Doesn’t Really Cover Them
According to the Homeowners 3 – Special Form (HO3) coverage form, there is some coverage for residence employees, but it isn’t much:
- Residence employee personal property is covered as long as it is in any residence occupied by an insured.
- Medical payments coverage is available for residence employees as long as the injury was caused by the residence employee in the course of the residence employee’s employment with the insured. There are three caveats here:
- This coverage is limited to the medical payments limit on the face of the policy, which is usually $5,000 or less. This limit may not cover every injury, and would not extend to cover lost wages during a recovery period.
- The coverage is limited to the residence premises only. If your residence employee is injured off the premises, there is no coverage.
- If the employee is required to be covered under workers compensation, there is no coverage for medical payments under the policy.
If your residence employee is required to be covered under workers compensation law, there is no coverage provided under the homeowners policy for personal liablity or medical payments coverage for any reason.
Unless your residence employee lives on the residence premises, there probably isn’t much concern about their personal belongings. If the employee is a live-in, talk to your broker about extending the personal property portion of your homeowners policy to cover their belongings.
The biggest concern for residence employees should be where the coverage is for on-the-job injuries both on- and off-premises. There is no workers compensation benefit on a homeowners policy, so if your residence employee is injured, you could be on the hook for medical expenses and lost wages.
Do You Need Work Comp for Your Residence Employees?
Many states require employers with at least one employee to provide workers compensation coverage, and with good reason: on-the-job injuries can be expensive. This includes injuries to residence employees that perform any functions around the house or on the grounds.
Under certain circumstances an employee of a contractor can become the employee of a homeowner. There are cases where a homeowner hires a contractor to perform duties and an employee of the contractor is injured on the job. If the contractor is unlicensed and uninsured, courts have ruled that the injured employee has become a de facto employee of the homeowner, and thus responsible for that employee’s medical bills and lost wages.
Whether you hire your own employees or an outside firm to work around your home, it is important to understand where the workers injuries may be covered. If you don’t know where the coverage would be, then it is most likely coming out of your own pocket.
How Do You Cover Residence Employees?
There are four ways to make sure your residence employees are covered in the event of on-the-job injury:
- Screen all contractors. Verify that contractor licenses are valid, and demand proof of current workers compensation insurance.
- Lease residence employees through an employee leasing company that provides workers compensation insurance. Leasing may also handle payroll and taxes, which keeps you legal in all aspects.
- Add a workers compensation endorsement to your homeowners policy. Not all insurance companies offer this endorsement, but it is possible with some of them.
- Purchase Workers Compensation Insurance. Policies are available for residence employees on a stand-alone basis.
If you haven’t had a personal insurance checkup lately, now would be a good time to call your insurance broker to verify that you have workers compensation insurance coverage on your homeowners policy. Most policies DO NOT include this coverage, so please don’t assume that yours does.