You’ve hired domestic staff to manage your household and maintain your lifestyle. From nannies and housekeepers to personal chefs and estate managers, their roles can make your day-to-day so much easier. However, employing staff comes with inherent risks that - if not properly managed - can lead to financial loss, legal complications, and reputational damage.
You may be surprised to learn that standard homeowners' insurance policies often provide little or no protection for claims related to domestic staff. Even umbrella policies don’t typically provide coverage that would protect you in these scenarios, so relying solely on these types of primary policies can leave you exposed.
WHAT ARE THE RISKS ASSOCIATED WITH DOMESTIC STAFF?
1. Workplace Injuries. Domestic workers can sustain injuries while performing their duties, such as slipping on wet floors or working with hazardous cleaning chemicals. Injured employees may require extensive medical care and time off, potentially leading to costly claims or lawsuits against you as their employer.
2. Employment Practices Claims. Employers of domestic staff are subject to employment laws, and disputes can arise over issues like wrongful termination, discrimination, harassment, or wage violations. In some cases, misunderstandings or grievances escalate into legal claims, even if your actions were unintentional.
3. Third-Party Liability. If a domestic worker causes damage to property or harm to others while on duty, you may be held liable. For instance, a housekeeper accidentally damaging a guest's expensive belongings or a personal assistant causing an accident while running errands could result in significant financial exposure.
4. Reputation Damage. Legal disputes or workplace controversies involving domestic staff can attract unwanted attention and potentially harm your stellar reputation. In the age of social media, even a minor incident can quickly escalate into a public relations nightmare.
HOW DOES INSURANCE HELP PROTECT EMPLOYERS?
Workers' Compensation Insurance. Workers' compensation insurance is a cornerstone of risk management for employers with domestic staff. It provides coverage for medical expenses, rehabilitation costs, and lost wages if an employee is injured or becomes ill while performing their job.
Many states require workers' compensation coverage for domestic staff, even if the household employs only one individual. By ensuring compliance, you can avoid legal penalties and protect yourself from lawsuits stemming from workplace injuries.
Employment Practices Liability Insurance (EPLI). EPLI is designed to cover legal expenses and damages arising from employment-related claims such as discrimination, harassment, wrongful termination, or retaliation.
Personal households are not immune to the types of employment disputes that corporations face, and EPLI can provide critical financial protection. This coverage can also include legal guidance to help prevent claims, such as ensuring compliance with local employment laws and best practices for hiring, firing, and managing staff.
Excess Personal Liability Insurance. Excess personal liability insurance provides additional protection beyond the limits of standard homeowners or auto policies. This coverage is particularly valuable for individuals who face heightened risks due to visibility of high-end assets.
For instance, if a domestic worker files a lawsuit for an injury or alleged mistreatment, the legal defense costs and potential settlements could exceed the limits of your primary insurance policies. An excess policy ensures that your personal wealth is protected in such scenarios.
WHAT ARE MY NEXT STEPS?
Employing domestic staff enhances your quality of life, but it also introduces an entirely new set of risks. By investing in workers' compensation, EPLI, and excess personal liability insurance, you can protect your financial assets while ensuring smooth household operations.
Contact your current broker to review your existing policies.
Have a collaborative discussion about your unique circumstances and identify areas where you can take proactive measures to mitigate risks.
Ensure your coverage and policy limits are appropriate for your situation.
Plan to hold semi-annual calls to bring your broker up-to-date with changes to staffing, including personnel or scope of work responsibilities.
Proper risk management isn’t just about safeguarding wealth—it’s about creating a safe and professional environment for both you and your employees. With the right insurance coverage and proactive strategies, families can enjoy the benefits of domestic staff without unnecessary worry.
Got questions? Contact us (opens a new window) today or learn more about Private Risk Solutions here (opens a new window).
The information provided in this article is for educational purposes only and should not be considered professional advice. Please consult with a Lockton representative for information regarding specific insurance products and services.