Workers’ compensation insurance should be considered by all household employers. Each state administers their own worker’s compensation system and the requirements vary. Some states require all household employers to obtain workers’ compensation coverage regardless of the employee’s hours or earnings. Other states mandate that only certain household employers obtain coverage (generally based on how much an employee earns, how many hours the employee works, or how many employees are working). And there are a number of states that do not require household employers to obtain coverage at all. If coverage is not mandatory, employers have the option to add this elective coverage.
Below are questions and answers about workers’ compensation insurance:
What is workers’ compensation?
Workers’ compensation is an insurance policy that protects you if your employee is injured on the job, and makes a claim for lost wages and/or medical expenses.
Is workers’ compensation included in my homeowner’s policy?
You will always want to review your individual policy and check with your insurance agent, but workers’ compensation may not be included in your current coverage. If your umbrella policy does not cover your employee, you can often add a rider to your existing policy. This tends to be the easiest and least expensive option for obtaining coverage. If your current insurance provider does not offer workers’ comp coverage, you can obtain a policy from any licensed insurance provider, and we encourage you to shop around for a policy as rates vary.
Please note that some states administer workers’ compensation coverage exclusively or as an alternative to private coverage.
How do I know if I am required to have workers’ compensation coverage?
You can contact the Labor Department of your state or a NannyChex account specialist would be happy to provide you with your state’s requirements and your options for obtaining coverage.
Workers’ compensation insurance in my state is voluntary, so I don’t need to worry about this, right?
Not necessarily. Even though your state may not require that you obtain coverage, you may still be liable for lost wages and/or medical expenses if your employee is injured on the job. NannyChex always recommends that you explore your insurance options with a licensed insurance professional and we recommend all household employers obtain worker’s comp coverage even if the law does not require that you have coverage.
What happens if I don’t get coverage?
States often conduct workers’ compensation audits to ensure that employers are properly insured. Employers who are required to have coverage, but do not obtain a policy, may be subject to penalties and fees.
NannyChex is able to assist you with your worker’s compensation audit, and in most cases, we can handle it for our clients at no charge.
How much does workers’ compensation insurance cost?
As with most insurance products, prices vary when insurance is obtained through a private underwriter. We encourage you to shop around to find the best rate and a company that you are comfortable with. If your state solely administers coverage or offers a coverage option, the cost is generally fixed and determined based on the employment type.