Workers Compensation - Covering Injuries to Household Employees
If a household employee is injured while working for me, will my homeowners insurance policy provide any help with the medical bills? What if the employee sues me? Do I need to purchase workers compensation insurance? You are not required to purchase workers compensation insurance to cover these employees, because the Texas Workers’ Compensation Act specifically exempts “domestic and casual workers” engaged in employment incidental to a personal residence. The law provides no definition of “domestic” or “casual,” but it’s safe to assume the exemption includes cooks, housekeepers, laundry workers, maids, butlers, companions, nurses, baby-sitters, chauffeurs, gardeners and other employees working around your home on either a full time or part time basis.
Even though you are not required to purchase workers compensation insurance, you may want to consider doing so on a voluntary basis. Here’s why.
Your homeowners insurance policy is designed to cover some medical expenses incurred by injured employees, as well as any legal expenses and amounts you become legally obligated to pay should an employee sue you because of the injury.
The policy limit for medical expenses may not be sufficient, however, to cover all the costs in case of a very serious injury. And if the employee is unable to work for a period of time, the policy does not include disability payments. If you think you may want to cover all medical costs for a valued employee, as well as continue paying their salary during a period of disability, you should definitely consider purchasing workers compensation insurance coverage on a voluntary basis.
Workers’ compensation insurance coverage would pay all medical bills arising out of an employee’s injury. In addition, the employee would continue to receive income during the period of disability. The amount of disability income is prescribed by law.
Another important benefit of providing workers’ compensation insurance coverage is that it limits your liability. Simply put, if a household employee collects workers’ compensation benefits after being injured, that employee generally can’t sue you for damages. If the worker or the worker’s family does sue, the employers’ liability portion of the workers compensation policy will provide your defense and pay any resulting settlements or judgments up to the limit of liability. Your personal umbrella policy will pay any excess costs, up to its limit.
Family Trusts and Limited Partnerships
If you pay household employees through a family trust or limited partnership, the answer is different. Even if the trust or partnership is covered as an additional insured on your homeowners policy, the coverage for household employees may not apply to employees of the trust or partnership. For this reason, we recommend that you purchase a workers’ compensation insurance policy in the name of the trust or partnership.
You are probably aware that Texas employers are not required to purchase workers’ compensation insurance coverage. But employers that don’t purchase the coverage are subject to unlimited liability for employee injuries and still have obligations to make certain disclosures to employees and reports to the state. In our opinion, this is potential liability and trouble that can be easily avoided by purchasing the coverage.
Farm and Ranch Employees
Employees engaged in farming or ranching activities are not considered household employees and are not covered by the homeowners policy unless special coverage has been purchased. For the same reasons mentioned above, we recommend that you purchase workers’ compensation coverage for farm and ranch employees.
If you have any further questions about insurance coverage for household employees or want a quote for workers’ compensation insurance coverage, please contact your SwingleCollins agent.
Swingle, Collins & Associates specializes in workers compensation insurance coverage. The descriptions of coverages listed on this website are brief and subject to the provisions, limitations, and exclusions that can only be expressed in your policy and related endorsements. For additional information of how Swingle, Collins & Associates can assist in meeting your coverage needs for: family trusts, limited partnerships, or farm and ranch insurance please contact your dedicated risk manager to discuss the benefits and services of personal insurance coverage.
The information contained on this page is provided for informational and educational purposes only. It contains general information on insurance issues and may not reflect the most current developments in insurance coverage and is unlikely to apply in all factual scenarios. The information does not include all the terms, coverages, exclusions, limitations or conditions that may be contained in the actual insurance contract language. The policies themselves must be read for those details. Sample policy forms will be made available upon reasonable request.