What happens if your nanny is injured while caring for your children? Are they covered through your homeowner’s insurance policy? Or your umbrella policy? Are you on the hook for medical bills? How much do you have to pay?
Check out my latest video where I share a real world story about a nanny falling down the stairs and breaking her leg while at work. I cover who is responsible for paying the nanny’s medical bills, how to protect yourself in case this happens in your home plus:
– Homeowner’s Insurance Policy Coverage
– Umbrella Policy Coverage
– Workers Compensation Insurance Policy
– How to setup Workers Compensation Insurance
– How much does Workers Compensation Insurance cost?
Click the button below to watch the video. I hope you find it useful!
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A transcript of the video can be found below:
Hi everyone, Laura from Nanny Parent Connection here.
I was recently speaking with a family in my area, and they asked me what they should do as their nanny had fallen down some stairs while working in their home and broken her leg.
Their homeowner’s insurance policy did not provide any coverage because the nanny was at work in their home when the accident happened.
The family had not set up workers’ compensation insurance, so she didn’t have that as an option for any coverage either.
And because this injury happened on the job, the nanny’s own personal health insurance, may not have kicked in because the injury happened while on the job.
So, needless to say, both the nanny and the family were in a pickle because the nanny had no way to recover those lost medical expenses and lost wages through work through her employer.
And the family was left without a nanny so they needed to find new a new nanny care and they also felt a responsibility to take care of their nanny’s medical expenses.
As you can imagine, all of those costs really started to add up.
The nanny was left with no ability to get paid, and no way to easily get the cost of the medical treatment she needed covered except for out of her own pocket.
Now, I never heard the end of this story, but there are a dozen ways where it likely didn’t end well.
Unfortunately, the nanny may have had no other choice but to take legal action against the family to recover the cost of the medical expenses, as well as lost wages.
I’ve heard from many families who have purchased umbrella policy coverage when they have a nanny working in their home.
Homeowner’s Insurance and Umbrella Policy Coverage
If you plan to go this route, make sure to connect with your insurance company to discuss any limitations of your homeowner’s insurance policy or your umbrella coverage policy as it pertains to having a household employee working inside your home.
Specifically, make sure the policy and associated coverage extends to the nanny if they sustain an injury while working on the job. I have heard that some insurance companies WOULD cover this while others do not.
My family has an umbrella policy and for one million dollars of coverage, it costs us about $20/month which is pretty affordable.
Workers’ Compensation Insurance
Back to the story of the nanny falling down the stairs…
If the family would have had a Workers’ Compensation Insurance Policy in place, the nanny would have had coverage for medical expenses as well as partial coverage of her lost wages.
All the nanny would need to do is to let the doctor’s office know that she was coming in for an appointment for an on the job injury. The doctor then fills out all of the necessary paperwork in order to get the ball rolling.
Workers’ compensation insurance is actually required for most workers in America.
According to insureon.com, there are some special circumstances where a worker is exempt from the worker’s compensation coverage requirements.
This includes domestic workers when there is only one employee working in the home, and the employee doesn’t work more than 40 hours per week.
That means for many household employers, such as a family employing a nanny, they would not be required to provide workers’ compensation coverage for their nanny.
While you may not be legally required to offer workers’ compensation coverage for your nanny, after researching this topic I will not employ a nanny again without having a workers’ compensation policy in place.
I have heard too many horror stories, and to be honest it just opens the door to so much liability where you could be putting your assets like your car, your home, and any investments at risk.
And a quick fact that will drive this point home: According to the National Safety Council, the average cost of a workers’ compensation claim is around $40,000.
Wow. That’s a big number!
I recently sat down and make a call to the Department of Labor and Industries to try to figure out what the process to set up Workers’ Compensation Insurance looks like. I was actually pretty surprised, it was easier to set up and quicker to set up than I thought it would be.
How to set up Workers’ Compensation Insurance?
This is specific to Washington state and interestingly Washington state is one of only four states that requires you to purchase workers’ compensation insurance from a state fund.
In many other states, there are options for private insurance policies. So, do some research and check out what the requirements are in your specific state.
Below are the steps you need to take to set up Worker’s Compensation Insurance in Washington state. The below steps assume that you already have a business license which allows you to employ household employees in your home:
- First, you will go to the Washington State Department of Labor and Industries website.
- In the Business tab in the center of your screen, you will scroll down and select Help for Small Businesses.
- Under the Employer Essentials section on the left-hand side, you will select Open A Workers’ Compensation Account.
- On the next screen, scroll down and click on How To Get A Workers’ Compensation Account, you will then arrive at a page that walks you through and explains the entire process.
It’s important to remember you will be assigned an account manager as part of this process, so you will have a point of contact to help answer any questions you may have along the way.
Once you have submitted the application for elective coverage to the Department of Labor and Industries, they will set up your account. This usually takes about a week to complete.
After your account is set up, the Department of Labor and Industries will send you several pieces of information that you will need for quarterly filings, including something called a PAC code.
From there you will log into the Department of Labor and Industries website for your quarterly filings. At the end of each quarter, you have about a month to complete the filing process.
The information that you will need for those quarterly filings includes the nanny’s gross pay for that quarter, as well as the number of hours worked in that quarter. The premium information is then calculated and you pay the premium.
So, are there hoops to jump through? Yes
Does it take a few steps and a few minutes to complete? It sure does, but the process is actually relatively easy, and the best part is that you have a dedicated account manager, a real person who you can reach out to help walk you through the process if you need help along the way.
Workers’ compensation is absolutely crucial to make sure that you are protected as an employer, and that your nanny is protected as an employee so that they have access to speedy and complete medical care, and coverage and they can also recoup some of the wages they’ve lost as a result of an injury or accident.
So you may be wondering, how much does Workers’ Compensation Insurance cost?
For 2022, the average rate for $100 in payroll is around $1.50. So if you are paying your nanny approximately $1,000/week, the cost for Worker’s Compensation Insurance would come out to about $15/week.
Your exact cost however will be calculated based on several factors, these include the exact payroll numbers including hours and wages, your location, your number of employees, industry and risk factors, coverage limits, and your claims history.
Does Workers’ Compensation Insurance protect against lawsuits?
Well, according to insureon.com, workers’ compensation insurance usually includes employers and liability insurance, but that is not the case in Washington state.
For any Washington employers who want coverage to protect against employee lawsuits over injuries, they must purchase additional stopgap coverage.
This is something you can typically have added to your general liability policy purchased through a private insurance company.
This is a great question to direct back to your homeowners’ insurance….ask them what it might look like if you purchase stop-gap coverage through them.
Alright everyone, I know this was a heavy topic, but it was really really necessary, and I hope many of you are now seriously considering purchasing Workers’ Compensaton Insurance.
Again, after researching this topic, I have personally made the decision that I will never employ a nanny again without having this coverage in place.
I have just heard too many horror stories, and I just don’t think it’s worth it to take on that risk without protecting yourself.
Thank you for tuning in, I hope you found this information helpful. If you like this video please click on the like button, subscribe, or ring the bell so that you can be alerted when more of these videos come out.
Thanks everyone, bye!