Insurance

Independent Contractors generally do not have Workmans Comp insurance

Paramount on the minds of the homeowner should be knowing what insurance coverage is available in the event of injury to the domestic worker. Add to this situation independent contractors such as dog walkers who find themselves on the premises of the homeowner and the typical homeowner finds himself facing an injury and/or lawsuit exposure.

 

The lack of Workers Comp (WC) coverage forces the homeowner to rely on his homeowners policy for coverage for an injured domestic. Two coverages are available under the homeowners policy: medical payments and liability. Medical payments coverage will respond for the medical bills of an injured domestic regardless of negligence on the part of the homeowner. Typical limits of coverage are $1,000 to $5,000. This coverage would also respond for the injury of an independent contractor on the premises. Should he be injured on the premises of the homeowner, regardless of negligence, the medical payments coverage will respond. Note that when medical payments responds it provides coverage only for medical expenses and does not provide coverage for lost wages. Liability coverage responds for both domestics and independent contractors only if the homeowner is legally obligated (negligent) for the injury. Unlike WC coverage, the liability coverage will not respond regardless of fault. For example, a roofer at the insured’s residence is injured through no negligence of the homeowner and falls off the roof injuring himself. Since there was no negligence on the part of the homeowner, coverage is limited to medical payments. Liability coverage will not respond once the medical payments limits are exhausted.

 

WC coverage on a domestic provides significant benefits to the domestic such as medical coverage from first dollar on an unlimited basis and lost wages coverage after the appropriate waiting period. Additionally, the employer (homeowner) receives protection under the “exclusive remedy” doctrine when WC benefits are elected. Making certain that a contractor has WC coverage in place is one indicator of a reputable business owner. Make certain all contractors working on the insured’s premises have WC coverage.

 

WC policy provides coverage for medical bills from first dollar with no deductible, and with no dollar limit this exclusion is not significant. purchasing WC coverage on the domestic the insured has obtained protection from lawsuits since WC is an employee’s sole remedy.

 

Even if your homeowners policy covers injuries to your domestic employee, the policy limit could be grossly inadequate in the event of serious injury, permanent disability, or death.  The advantage of workers compensation coverage is that it provides broader protection (e.g., disability payments) than your homeowners policy, including unlimited medical expenses in most states.  If an outside firm or agency is used to hire your domestic, verify the worker has workers compensation coverage. Obtain a certificate of insurance from the employment agency on an annual basis showing this coverage. Consider some type of fidelity bond for these employees, particularly for new employees. This bond will protect you if the domestic worker commits a dishonest act in your employment (e.g., theft of jewelry). If an employment agency or service provides these employees, verify that the employment agency has purchased fidelity bonds on them and ask for a copy of the bond certification form.

 

Choose the people who work in your home wisely. Homeowners regularly hire independent contractors to work on their homes but are often unaware of the large exposures that could result in hiring an under-uninsured contractor, particularly for large projects. For example, an uninsured roofer working on your home may sue you for damages if he is injured on the job.

 

Ask for certificates of insurance for workers compensation and general liability policies. You should also receive these certificates for anyone you may hire to work in your home.  You should make certain that any contractor they use for services is licensed and insured with WC as well as other appropriate coverages, such as general liability and fidelity bond