The home insurance policy refers to these individuals as “residence employees,” and they are limited to those individuals who perform duties in connection with the maintenance or use of the home. This means that your business employees are not considered residence employees by the home insurance policy, even if they are conducting their business in your home.
In some states, such as California, certain domestic workers are considered employees who are eligible to receive workers compensation benefits in accordance with state law. In these states, you are considered an employer and, by law, you must maintain workers compensation insurance to cover your employees. It can be very difficult to find proper workers compensation for just one or two employees, so home insurance companies in California have modified their policies to provide minimal coverage on homeowners insurance policies.
In addition, the HO-90 form is an endorsement that can be added to your home insurance policy to provide state-mandated workers compensation coverage. It provides coverage on a very limited and specific basis for residence employees. You must inform your insurer of the extent to which you have employees working in your home so they’ll know what coverage to offer you. Unfortunately, the HO-90 form is not available in all states, so in some states, you may be required to buy approved workers compensation insurance as separate policy.
However, if you are not required by law to maintain workers compensation insurance for domestic employees, you should understand what other coverage is available in your home insurance policy. For example, the personal liability and medical expense coverages can be extended to cover injury to residence employees. One interesting difference is that residence employees who reside in your home are eligible to receive medical expense coverage, whereas regular residents or long-term guests are not eligible.
But remember that personal liability and medical expense coverage are not substitutes for workers compensation insurance when state law mandates it. In fact, the home insurance policy specifically excludes coverage for residence employees if the benefits are paid or should be paid by workers compensation insurance. This means you are uncovered for injury to a residence employee if he or she is eligible for workers compensation benefits and you did not buy the coverage, so not only would you not have workers compensation insurance, but your home insurance policy’s personal injury and medical expense coverage would exclude the claim. As a result, you would likely be subjected to fines by the state for not obeying the law.
In closing, you should check with your state’s labor laws to understand any insurance obligations before hiring domestic help. You then must review your homeowners insurance policy to see if you have the correct coverage in place.