If you're a homeowner, chances are that at one point or another you will hire someone to do work in or around your home. Whether you're paying the 16-year old neighbor across the street to rake leaves or hiring a professional landscaping crew, you may think there are no issues that could occur. However, should a worker at your home sustain an on-the-job injury, these small differences could make an impact on your personal liability.
Even if your homeowners policy provides coverage for certain in-home injuries, this coverage may not extend to domestic workers or landscapers, leaving you vulnerable to a personal lawsuit. For example, if you hire regular help that could be classified as an employee and you fail to carry workers' compensation insurance, you could be sued in the event of an injury. In this case, your homeowners policy may not provide sufficient liability coverage.
On the flip side, you will also need to consider what happens if an employee or service causes damage to your home. Perhaps an over-zealous cleaning crew used the wrong product on your bathroom counters and now they're permanently damaged. Will the cleaning company foot the bill, or will you be stuck paying? Understanding the differences up front, including who is responsible for what, could save you a serious headache in the future.
One of the factors used to determine if you are liable for a worker's injury is whether that individual is classified as your employee or as an independent contractor.
If you hire an individual, rather than a company or agency, to work in your home, you'll need to determine whether this individual is classified as an employee or an independent contractor. Further complicating matters is the fact that different government bodies have different definitions.
Another key consideration is whether the worker is classified as a domestic, casual or professional employee.
A domestic worker, for example, is hired to perform ordinary household duties such as cleaning your home or preparing meals on a regular basis. If you directly employ this person, you may need to carry workers' compensation insurance. However, if this person is contracted through a third-party cleaning service, that service may provide this coverage, relieving you of the requirement to do so. Laws can vary significantly between states with factors such as the number of hours worked or the average payment impacting your coverage requirements. It's a good idea to discuss your specific situation with your insurance agent.
A casual worker is someone who does occasional work around your house, such as an adult who is hired to do an odd job or a babysitter age 17 or younger. Casual workers are excluded from workers' compensation laws and may be covered by your homeowners insurance. Professional workers include anyone who is working on your home whom you've hired with a formal contract, such as a landscaper. In some states, these professionals can't be licensed without carrying their own insurance, so ask to see certificates of insurance before work begins.
Professional cleaning and landscaping companies may advertise as "licensed, bonded and insured." Being "bonded" means that the company has purchased a surety bond. In the unlikely event your home is damaged during routine cleaning or landscaping, the company has coverage to reimburse you for this damage. A surety bond covers normal accidents, such as a countertop being damaged from the wrong cleaning material.
In general, it's always a good idea to speak with your insurance agent if you'll be hiring help around your house. After all, the intention behind hiring a housekeeper or landscaper is to minimize stress in your life, not compound problems! Your agent can answer questions about your homeowners policy and discuss additional coverage needs, such as an umbrella policy for increased liability coverage.
