Guides
Household employees and workers' comp
Homeowners insurance usually does not cover on-the-job injuries to a nanny, housekeeper or gardener you employ. Workers' compensation is the coverage that fits.
If you employ a nanny, housekeeper, home health aide, gardener or other household worker and that person is hurt on the job, workers' compensation is the insurance designed to pay, and a standard homeowners policy usually is not. The ISO homeowners form carves out injuries to anyone eligible for workers' compensation benefits that you provide or are required to provide, and it treats a "residence employee" in its own special way. Whether you must carry workers' comp for a household worker depends on your state, and the answer is often yes once the work passes a threshold of hours or pay.
The wording discussed here comes from the ISO HO-3, form HO 00 03 05 11. Your insurer's form and your state's endorsements control, so read your own policy and declarations page.
Who counts as a household employee
The Internal Revenue Service describes household employees as housekeepers, maids, babysitters, gardeners and others who perform household work in or around your private residence as your employee. Repairmen, plumbers, contractors and other business people who provide their services as independent contractors are not your employees. In the IRS's words, household workers are your employees if you can control not only the work they do, but also how they do it (IRS Topic 756). Paying someone by cash, or calling them a "1099 worker", does not change the analysis. The label on the arrangement matters less than the control you exercise.
The homeowners form has its own definition. A "residence employee" is an employee of an insured, or one leased to an insured by a labor leasing firm, whose duties relate to the maintenance or use of the residence premises, including household or domestic services. A temporary worker furnished to substitute for a permanent residence employee on leave, or to cover seasonal or short-term workload, is not a residence employee under the form. A contractor's crew is not a residence employee either, because they work for the contractor. See injured contractors and workers at your home for that situation.
What the homeowners policy does
The residence employee gets specific treatment in the ISO HO-3.
- Coverage E, personal liability. Coverage E does not apply to bodily injury to a person eligible to receive benefits voluntarily provided or required to be provided by an insured under a workers' compensation, non-occupational disability or occupational disease law. If your state requires you to provide comp for your nanny, her injury claim falls squarely inside that exclusion.
- Coverage F, medical payments to others. Coverage F excludes a residence employee injured off the insured location in a way that does not arise out of the job, and it excludes any person eligible for workers' compensation benefits. A residence employee hurt on the job is therefore a Coverage F claim only where comp does not apply.
- Motor vehicle, watercraft and similar exclusions. The form states that its motor vehicle, watercraft, aircraft, hovercraft and non-insured-premises exclusions do not apply to bodily injury to a residence employee arising out of and in the course of employment by an insured. The practical meaning is that some injuries to a household employee that would be excluded for others can still be within the liability coverage.
- Coverage C. At your request, personal property of a residence employee in any residence you occupy can be covered, as with guests.
In short, the policy does not replace workers' compensation for someone you must cover. It addresses liability claims by people who are outside the comp system, such as a worker your state does not require you to cover, and a few special situations. Because the exclusions turn on whether the person is eligible for comp, your state's workers' compensation law decides the outcome, and an insurer may deny a claim that comp should have covered.
Does your state require workers' comp for a household worker?
There is no single national answer. Workers' compensation is a state system, and each state sets its own rules on whether household or domestic workers must be covered, how many hours or how much pay triggers the duty, and whether a homeowner is an "employer" at all. Some states require coverage for domestic workers who work more than a stated number of hours a week. Others exempt domestic service completely, or exempt it below a threshold. A few allow a worker to be covered voluntarily.
Because the rules differ so much and change, the dependable step is to ask your state's workers' compensation agency or your insurance department whether your arrangement is covered. home insurance rules by state points to each state's insurance department, and your state guide lists the regulator. If you employ someone in more than one state, such as a vacation home, check both.
Ways to cover a household worker
| Option | What it covers | What to ask |
|---|---|---|
| Workers' compensation policy | Medical care, partial wage replacement and disability benefits for your employee | Whether your state requires it, and what the premium is based on |
| Endorsement to homeowners policy | Some insurers offer an endorsement providing workers' compensation and employers' liability for residence employees | Whether it satisfies your state's requirement |
| Separate household employer policy | A policy designed for domestic employers | Which states and job types it covers |
| Payroll service that arranges coverage | Handles wages, taxes and sometimes insurance | Who holds the policy, and whether it names you |
| Employee's own health insurance | Not a substitute | Comp is employer-paid and no-fault |
Availability depends on the insurer and the state, and the option you pick should be confirmed in writing as satisfying state law where comp is mandatory. Employers' liability, the second half of a comp policy, covers a lawsuit by an employee who is allowed to sue, which the homeowners policy will not do.
The tax side and why it matters here
An employee relationship also carries payroll obligations. According to the IRS, if you pay cash wages of $3,000 or more in 2026 to any one household employee, you generally must withhold Social Security and Medicare taxes and pay the employer's share. If you pay household employees more than $1,000 in any calendar quarter of the current or prior year, you generally owe federal unemployment tax on the first $7,000 of each worker's wages (IRS Topic 756, thresholds can change each year). Employers who do not treat a worker as an employee for tax purposes often find that they also failed on the insurance side. If a claim arises, the question of whether the person was an employee will be answered with the same facts the IRS uses. State rules on unemployment insurance and minimum wage also apply, and a payroll service or tax professional can help.
Hypothetical example
Say you employ a nanny 35 hours a week, paid by check. She slips on your wet kitchen floor, tears a knee ligament and needs surgery. You have no workers' comp policy and your state requires coverage for domestic employees at that schedule.
- You report the claim to your homeowners insurer. Because she is eligible for comp benefits you were required to provide, Coverage E and Coverage F are likely excluded.
- Without comp insurance, you may owe her medical bills and wage benefits directly under the state program, and the state may penalize you for the missing coverage. Some states let the employee sue the employer in tort when the employer is uninsured.
- If you had carried a comp policy or an endorsement, the insurer would have paid the medical bills and lost wages, with no argument about fault.
Whether any of this applies to you depends on the state and the facts. These figures and facts are invented to show how the pieces fit.
What to do now
- Decide who is an employee. List everyone who works in your home regularly and ask who controls the schedule, tools and methods. Independent contractors with their own businesses and insurance are outside this guide.
- Check your state's rule with its workers' compensation agency, by hours and pay.
- Ask your agent how your policy treats residence employees and whether the company offers an endorsement. Compare against a stand-alone policy, and see Liability exclusions: what Coverage E won't pay.
- Set up payroll correctly so the employment record matches the insurance.
- Review liability limits for the other risks a household brings, such as a worker injuring a guest or a visitor. how much liability coverage should a homeowner carry? and umbrella insurance for homeowners: what it adds and where it stops cover limits.
- Keep records: hire date, hours, wages and any injury reports.
Key takeaways
- A standard homeowners policy excludes injury claims by people eligible for workers' compensation benefits you provide or must provide, which includes many household employees.
- Whether you must carry comp for a nanny, housekeeper or aide depends on your state's hours and pay thresholds, so check with the state agency.
- Options include a workers' compensation policy, an insurer's residence employee endorsement or a household employer policy.
- The IRS treats workers you control as employees, and for 2026 the household employee tax threshold is $3,000 in cash wages per worker.
- Skipping comp can leave you personally responsible for an injured worker's medical bills and wage benefits.