Nanny Worker's Comp

[scbunker]

My wife and I are expecting our first baby in June, and we are considering a Nanny Share with some friends that just had a baby. We've worked out all the federal and North Carolina tax stuff we have to do.

I'm wondering how necessary is worker's comp insurance. It's not required for "domestic servants" in NC, and I'm finding that it costs between $1,000 and $1,200 per year, but both families have to have it for it to be effective; it can't be split or shared. So it's really between $2,000 and $2,400 per year - pretty expensive when compared to the nanny's income.

I gather from my renter's insurance policy that we're covered for any suit brought against us for bodily injury or property damage. Medical payments to the nanny are covered for injury which occurs on the insured location. It isn't clear whether medical payments to the nanny are covered for injury which occurs while off the insured location but in the course of employment. Medical payments to others are covered for injury off the insured location if caused by our nanny in the course of employment.

I gather that worker's comp insurance would cover for injury any time during the course of employment, would cover for lost wages, and also for any suit brought against us.

In your opinion, should we shell out for worker's comp insurance? Do you have recommended insurance companies? Can you describe a little how workers comp insurance works - are there limits of liability, deductibles, etc.? Since nannies are excluded from the NC Worker's Comp Act are we legally liable for off-location injury and lost wages?

If the info helps, our renter's insurance liability limit is $500K and medical payments limits is $5K.

Also, the nanny is very likely to be my wife's sister; I can't decide whether that matters for or against worker's comp insurance.

[VagabondMD]

Very complicated, nuanced issue, but if the sister-in-law is the nanny, I personally would go without. If it is a stranger, I fear that the liability might be too great.

Years ago, we did the nanny thing and were required by law to pay into a state workman's comp fund, IIRC. I am glad to have all of that behind me.

[jfoxcpacfp]

So you are required to have WC in NC only if you have 3+ employees. Given the relationship, I would probably have your SIL sign a contract and go without WC.

[seattlee]

We are in Washington State with the exact same situation...nanny share, non-mandatory workers comp.  We ultimately decided to not pay for workers comp and risk it because, like you say, BOTH families have to pay for it and the cost is insanely high compared to the value.

Your homeowners policy will likely NOT cover an injury sustained by the nanny unless it is due to some negligence of the home construction (e.g. a rotting or slippery step) that causes the injury.  Even THEN, your policy may exclude this for "employees" hired by the family.  Examples likely NOT covered by your home insurance would also include (1); your nanny hurts her back picking up the kids or stroller; (2) nanny is on a walk and slips and falls; and (3) nanny gets bit by a dog at the park.

In summary, don't rely on your homeowner policy to cover anything, although it may be worth going through very carefully.  You just have to decide whether you want to risk it or not (in our analysis).

[Gunther]

Did you find a solution? We are looking in AZ as our renters and umbrella policy don’t cover household employees under majority of circumstances. Thanks!