Sunday, April 27, 2014

Insurance for your Domestic Employees

Homeowners are at risk of being sued or made responsible for workers compensation and withholding payroll taxes anytime they hire a Nanny, cook, gardener, cleaning lady, handyman, caregivers, artisans, contractors and their subcontractors and employees;

Do you have insurance if they get injured on the job or sue you?

There are 3 main insurance risks, they are ;
  • workers compensation, a work related injury
  • general liability, your dog bites them
  • personal injury, wrongful termination or discrimination
Workers compensation: Your homeowners policy covers part-time household employees workers compensation protection if the work less than twenty hours a month. If you have a domestic employee working more hours, we can add coverage to protect you for $350 a year per employee. This covers the state mandated lost wages, medical, rehabilitation, and death benefits for work related injuries.

General liability: Your homeowners covers this usually up to $500,000 plus legal defense. This can be extended with an umbrella liability policy in increments of $1 million.

Personal Injury: We add this coverage to all of our policies, does your policy have it? This covers slander, libel, sexual harassment, discrimination and wrongful termination.

Hiring a general contractor or artisan to work on your home is also a risk, exposing you to liability. This risk can be reduced by demanding that your general contractor provide proof of liability, workers compensation coverage, AND name you as an additional insured ON HIS policy. Now he is first in line to pay the damages and his policy will also protect you. In addition, make sure that the general contractor pays all payrolls through his books. Then his employees and sub-contractors are not your problem. You can than avoid most workers compensation, liability, and tax pit falls.

Finally watch out for payroll tax problems. They are not insurable but can be costly. As the employer you are required to submit a 1099 or W-2 to the IRS for anyone paid more than $600. If they are deemed your W-2 employee, you are required to withhold and pay the state payroll taxes. Most domestic’s are considered W-2 employees . IF you fail to withhold the taxes and the employee doesn't pay them then you have to pay all of them plus fines. Several recent political runs for office have been damaged by accusations about not reporting and paying payroll taxes and hiring illegal aliens. Avoid this unwanted attention.

Please call us 650-328-1000 for help with this or any other insurance matters, we are always here to help.

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