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When it comes to hiring help around the house, you might have heard that you need potential employees to be bonded and insured. However, the need for this coverage depends on the type of help and how often they’re in your home. 

Having a household employee who is bonded and insured can protect you financially from things like theft and damage. These protections are expensive, however, and not everyone needs them. 

If you want peace of mind, hiring household employees through an agency that insures them is the best bet. Read on to learn more about what it means to have household help bonded and insured.

KEY TAKEAWAYS
  • When hiring a household employee, using an agency that requires employees to be insured and bonded is the easiest approach. 
  • The agency’s policy should cover any injuries or damage caused by the hired employee.
  • Bonding protects you from losses due to theft or broken contracts.
  • If you employ a housekeeper or other help to work in your home every day, you should also consider buying worker's compensation insurance.

Does my housekeeper need to be licensed, bonded and insured?

If you are looking for a housekeeper in your home, you need to consider who would be responsible in the event of an accident, or what would happen if that person turned out to be less than trustworthy. Insurance and bonds help protect both employer and employee if something were to go wrong during work hours or after them – this includes liability and medical coverages as well. 

"It's a value judgment people have to make on their own," says William K. Austin, co-founder of Austin & Stanovich Risk Managers LLC, independent risk management consulting and insurance advisory company with offices in Massachusetts and Rhode Island.

When it comes to hiring people such as lawn-care workers and house cleaners, "with routine stuff like that, I'm not really worried," Austin says.

But he and other insurance experts say it’s crucial to have the proper insurance in place on both your side and the service provider’s to ensure that it will cover things that might happen.

If your house cleaner falls down your stairs and is injured, it would be covered under the liability and medical payments portions of your homeowners insurance policy.

But you also need to consider whether your insurance will cover you if the person you hire does something that injures you or damages your property, he says. If someone is mowing your yard and a rock flies up and hits you in the head, your health insurance should cover whatever medical care you might require, Austin says.

But you should verify that you have the coverage you need.

"There's a good chance these workers will be covered by your homeowners or renters policy, but each company treats things a little differently," says Randy Petro, vice president of claims for Mercury Insurance in Orange County, California.

Even if the injury or damage is covered, a significant claim on your homeowners policy can have a big impact on what you pay for coverage. It’s also good to remember that if the damage is significant enough, it might exceed the coverage limits your insurance company will pay out.

What does bonded and insured household help mean?

Bonding helps you get reimbursed if the bonded person or company does not fulfill the contract. If the person you hired is bonded, you can file a claim against the company or the household help if they don’t do the work that was agreed upon or something is stolen from your home. 

Insurance, on the other hand, covers any injuries, health problems or damages done by the employees while working at your home. Most agencies will provide this coverage.

Here’s a little more detail on each of these coverages.

Bonded

Bonding is simply a way for you to be reimbursed if a person or company doesn’t fulfill its contract, doesn’t do the work that was agreed upon or steals from your home. If any of these things were to happen after you’ve hired help, you could file a claim against the company (or other household employees) with the bonding company.

A bonding company holds money that has been secured from the company and will pay out your claim after an investigation. It acts as a neutral third party to settle disputes between a company and its clients.

If you deal with a company or person that is not bonded, there is no claim process to deal with any disputes. You will have to rely on the goodwill of the helper you’ve hired. But the problem with that is that they can simply choose to ignore your complaints, refuse to refund your money or completely cut off communications. Your only option would be to sue them, which can quickly get expensive.

Insured

While dealing with a bonded company is important, making sure they are insured is absolutely essential. The hired companies’ insurance policy will cover any injuries, health problems or damage done during their employees’ work at your home. If the company is uninsured, the financial repercussions will fall on you or your homeowners insurance.

For example, if a house cleaner is injured on your property, they would file a claim with their own insurance company to cover their medical bills, lost wages and any damage they may have done to your home. It doesn’t just cover medical issues. If the house cleaner leaves a faucet running that floods your bathroom floor and does significant damage to your home, their insurance will cover the cost of repairs.

On the other hand, if you hire an uninsured cleaning company, you may end up on the hook for these types of expenses and, in a worst-case scenario, find yourself being sued by the uninsured cleaner you hired. While you can certainly make a claim on your homeowners insurance, depending on the circumstances, it may be denied, and even if they pay up, you will have to pay your deductible. Your rates will climb, so the accident will end up costing you money one way or another.

What are the best insurance solutions for different types of workers? 

The type of household worker you are hiring will determine what financial protection you need. While your homeowners policy will most likely cover occasional workers, you may need another solution if you have full-time employees coming into your home regularly.

Here are a few examples to consider:

Occasional workers

If you are hiring the occasional babysitter or a neighborhood kid to rake your leaves, shovel your walk or clean out the garage, your homeowners or renters insurance should be sufficient. Homeowners insurance provides a couple of different protections:

  • Medical payments. This coverage will protect you if a guest (or occasional employee such as a babysitter) is injured in your home, regardless of who was at fault. This coverage is designed for small claims. Coverage levels vary, but they usually start around $1,000 and go up to $5,000, which is generally sufficient to cover small accidents.
  • Liability coverage. The liability portion of your homeowners or renters policy will also cover injuries on your property, but it comes with much higher coverage levels. A standard homeowners policy comes with $100,000 in liability coverage. Most experts recommend carrying at least $300,000 in liability coverage.

Contract worker appointed by an agency

If you need to hire a household worker; for example, a nurse, cook or a housekeeper, you may use an agency to provide the service. In this case, you should verify that the company insures and bonds employees.

Ask for a copy of the certificates of insurance. Check the policy's effective dates to make sure it is current and consider calling the insurance company to verify the coverage is still in place. Phony certificates of coverage certainly crop up, so it is best to check directly.

Permanent full-time or part-time employees

If you have permanent home workers that work in your home every day or on a regular basis, you need coverage. Consider purchasing workers compensation insurance.

Workers comp insurance will cover medical bills and physical rehabilitation for an employee who is injured on the job. This coverage will also pay for lost wages if the employee is severely hurt and can no longer work. It’s best to check your state regulations to see if they require workers compensation for the type of employees you're hiring.

If your state requires worker comp for household employees, don’t ignore the law. 

Which insurance solution is best for people hiring several household employees? 

If you have significant assets or employ several household employees, you may want to consider an umbrella policy to up your liability coverage. While many homeowners policies cap liability coverage at around $500,000, an umbrella policy can push your liability coverage up to $5 million.

An umbrella policy offers additional protection beyond your standard home insurance. 

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