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Worker's Compensation Insurance

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Do I need workers' compensation insurance for my nanny?

March 2003

If I understand correctly (according to the brochures published by the California EDD), household employers are required to obtain workers' compensation insurance to cover their employees. I contacted a broker about this, and was told it would cost a minimum of $800-$1,000 year, which seems incredibly steep. Is ANYONE out there complying with this requirement (or can anyone convince me I've misunderstood the requirement)? If so, is the above $ figure in line with what you're paying? And if not, have you run into any difficulties, or heard of anyone who has? Thanks! Anonymous


Several years ago our nanny injured herself while lifting my child. It turned out that California homeowners' insurances were (?are) required to provide workers' comp insurance as part of the package. The employee has to work for you a certain number of hours, etc. So check with your homeowners' if you own your home. Would renters insurance also have this requirement? ellen
As part of my being a corporate recruiter with my own agency I had to go through this rigamarole several years ago. The first step you need to take is to speak with State Fund directly. They are marvelous people to work with. But here's the rub. There is a minimum premium that is required, and I not 100% sure, but I think that it's about $750.00 per year, and there's another factor, they audit your books on a fairly regular basis. I set it up and pay my accountant to do the bookkeeping for me. I sign payroll checks and pay his fees and that's it. It is not easy following the laws, and it is not cheap, but if something goes wrong and you get caught it can get very messy. Good Luck, jon
The 2 things to look at when comparing Workers Comp policies are minimum premium and premium rate.

Any Workers Comp insurance policy has a minimum premium, so if you are only employing one person it may be as expensive as insuring a couple or more. This minimum can vary considerably between insurance companies.

The rate is determined both by a risk assessment of the general type of work done, and your claims record. The rate is applied to your gross payroll and if, at the end of the year, you owe more than your up-front minimum payment you'll get a supplemental bill. You never get a refund on the minimum payment.

A good strategy is to talk to different brokers and find out if any of them deal with an insurance company that has an ''association'' for domestic employers. What this is is a group that is formed solely for the purpose of getting group insurance rates- it's not a real association, just a paper one, and you have nothing to do with it, it's just written on your policy. Forming an association yourself won't do any good since it has to be a very large group of policy holders for an insurance company to want to bother with writing small policies. A broker found one for my business, but eventually the insurer went out of business.

It's smart to talk to a lot of brokers- they have different resources and different levels of interest in your small policy. Also, check with State Fund Insurance. Contrary to popular belief, this is not a state agency but a private company formed by state mandate- they have to provide Workers Comp for any employer. Sometimes their minimum premiums are lower.

Homeowner's Insurance policies usually have a Workers Comp rider that is intended to cover occasional, casual laborers- not ongoing employees.

I would always have Workers Comp for any employee. It covers medical expenses, lost wages, and occupational rehabilitation if needed. Any injury can potentially have long-term health consequences (''most accidents happen in the home''), and expenses that you do not want to have to pay out of pocket. Besides, isn't it ethical to protect the welfare of people who serve us? Don't we expect the same when we are employees? anon


I tried to do a little research on Workers Comp through my Homeowners Insurance (CSAA). I spoke to an underwriter who said 2 different, conflicting things: 1)that it only applies to occasional ''employees'', like a handyperson, and 2)that it applies to on-going household employees. She also said that the injury or illness had to be judged to be the homeowner's fault, and that the coverage on medical payments was limited. Finally, she said that I should talk to the Claims Department to get a certain clarification. I haven't done that yet, but it sounds like the only way to be sure of your company's policy. anon
I have CSAA for homeowner's insurance. They do have workers comp as a basic part of their policy. My full time nanny tore ligaments in her back lifting my toddler about two years ago. Their workers comp clause covered the claim. anon
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