The day you hired someone, the house became a workplace.

Employee or independent contractor

This is the hinge. Almost everything else turns on it, and most households get it wrong by drifting into an answer instead of picking one.

Here's what doesn't decide it. What you call the arrangement. Whether anything was written down, whether the person asked to be treated as a contractor, whether they work for other families, or whether you pay cash on Fridays. Some of that can matter. None of it settles the question.

What does decide it is the substance of the relationship, and different agencies test that differently. Roughly, three things get weighed. How much you control how and when the work gets done. Who supplies the tools and materials. Whether the person is running an actual business, with other clients and insurance of their own. Then whether the arrangement is ongoing or one project, and whether the work is central to running the household.

Running that test is a legal and tax question, not an insurance one. We don't give legal, tax or employment advice. What we will say plainly is that you want a real answer from your own advisor before a claim makes the question urgent. The classification decides which policies are even in the room.

In practice it usually looks like this. A company that shows up with its own crew, its own equipment, its own schedule and its own certificate of insurance looks like a contractor. Somebody who works hours you set, in your home, with your things, under your direction, looks like an employee. Most households sit in the awkward middle, and that's where paying for advice earns its money.

Workers compensation for household employees

Here is the honest version. A wrong number here would be worse than none.

Whether a household is required to carry workers compensation for domestic or household employees is set by state law, and it varies by state. It can vary inside one state too, depending on the kind of work, how the person was hired, whether the work is casual or ongoing, and how that state draws its categories. Some states let a household buy the coverage voluntarily even where nothing requires it.

We will not publish a threshold, an hours figure or a dollar amount for any state. Those details change, and a wrong one could do a household real harm. Confirm what applies to you with the state agency that runs workers compensation where the person works, and with your own advisor. In the three states we work in most, those are the Oregon Workers' Compensation Division, the Washington State Department of Labor and Industries, and the Idaho Industrial Commission. Staff at homes in more than one state means asking the question once per state, which is part of why multi-home households need a careful look.

Two things hold whatever the threshold turns out to be. Required and sensible are different questions, and voluntary coverage is worth a look where you can buy it. And a workers compensation policy is not a homeowners policy. Some homeowners forms carry a limited medical or occupational injury benefit for certain residence employees, sometimes only by endorsement, with definitions and limits that move from form to form. It's generally much narrower, and it's no substitute where the state requires the real thing. Confirm against the policy.

Employment practices exposure

Employing somebody at home carries the same disputes any job does, with less structure around them. There's no human resources department, usually no handbook, and often nothing in writing about the terms.

The claims look like wrongful termination, discrimination, harassment, retaliation, wages or overtime paid wrong, and arguments about hours, breaks or leave. They come from current employees, former ones, and sometimes from somebody you interviewed and did not hire.

The question is where a claim like that lands. Personal liability forms, many personal umbrellas included, commonly exclude or limit employment practices claims. That's deliberate, not an oversight. This kind of claim is normally handled by a separate policy, and whether a household can buy one, and on what terms, varies by carrier and by state. Ask rather than assume.

Away from insurance, the ordinary things help more than people expect. A written agreement that states the terms, honest records of hours and pay, reviews on paper, and the same process every time something goes wrong. Those are employment questions, so take them to your own advisor.

Personal vehicles on household errands

This one comes up constantly, and almost nobody's looked at it.

A nanny drives her own car to pick a child up from school. A housekeeper runs to the market. An estate manager takes his own truck to fetch materials. In each one, somebody is driving a personal vehicle on the household's business, and that holds two separate questions.

• Her policy. Personal auto policies are written around personal driving, and driving for pay or for a business can be treated differently depending on the form. Whether her policy answers for driving done on your behalf is a question about her policy, not yours. She should ask her own company.
• Your side. A household can be held liable for an employee's driving on household business, depending on the facts. Whether your own policies answer for that, and in what order, depends on the forms. This is a common reason people go read the umbrella, and a common place where the wording turns out to say something other than what they remembered.

The third version is cleaner and still worth a look. An employee driving a car the household owns is mostly a question about your auto policy and who is allowed to drive on it. Make sure everybody who gets behind the wheel of a family vehicle is accounted for. Read personal umbrella insurance for how excess liability sits over auto, and mind the employment wording covered below.

Fidelity and theft by an employee

Nobody hires anyone expecting this, and the households it happens to usually had years of trust behind them first. That's exactly why it's worth thinking about early instead of in the moment.

It runs wider than jewelry out of a drawer. Cash and property, a card or an account used without permission, transfers made by whoever handles the payments, and padded or invented invoices from vendors an employee hired on the family's behalf. A household with an estate manager, a bookkeeper or anyone who can move money carries more of this than one without.

How insurance handles it varies. Homeowners forms cover theft, but how they treat theft by somebody you handed the property to differs from form to form, sometimes with exclusions or conditions aimed straight at that case. Some private client programs offer employee dishonesty or fidelity coverage, sometimes by endorsement, and availability varies by carrier and by state. Scheduled valuables run on their own terms again, one more reason scheduling jewelry and valuables is worth doing before you have a reason to.

Ordinary controls do more here than coverage does. Keep whoever approves payments separate from whoever reconciles them. Read the statements yourself on a schedule, cap the cards issued for household use, and run background checks on everyone at hiring rather than on the ones you wonder about. Where money moves electronically for the family, the verification habits on our personal cyber page apply to the people who work at the house as much as to the family.

An injured guest and an injured employee are different claims

Here's why the classification question carries so much weight.

A guest hurt at your house is generally a liability matter. The homeowners policy covers bodily injury to other people arising out of the premises, subject to its limits and exclusions, and a personal umbrella usually sits above it. That's the picture most people have in mind when they imagine somebody getting hurt at the house.

An employee hurt on the job is a different matter. Liability forms commonly exclude bodily injury to an employee arising out of the employment, on the reasoning that workers compensation is the route for that. So if the person is an employee and there's no workers compensation, the household can find the policy it was counting on has an exclusion pointed straight at the situation.

Same staircase, same fall, same broken wrist, and the answer turns on who the person was. That's the practical reason to settle classification and workers compensation on purpose rather than by default.

There's a third case. A contractor's employee gets hurt at your house, and that usually runs to the contractor's own coverage. Ask any firm that works at the property for a certificate of insurance, and read it when it arrives.

What a personal umbrella does and does not do here

Households reach for the umbrella on this subject, so it's worth being exact about what it is.

A personal umbrella is excess liability above the limits of the policies it lists underneath it. For an ordinary liability claim at a residence, an injured guest included, that's exactly the right tool and it does what people expect.

Where it usually stops is employment. Personal umbrella forms frequently exclude or limit claims arising out of employment practices such as wrongful termination, discrimination or harassment. Many also exclude what falls under workers compensation, disability benefits or similar laws. Wording differs by carrier and by form. Your answer is on your own declarations page and the form behind it.

There's a second umbrella question for households with staff. Whether the person counts as an insured or an additional insured anywhere in your program, and whether the umbrella schedule still matches the household you actually have. Hiring belongs on the short list of events that should send you back to that schedule, next to buying a house, adding a car or buying a boat. An umbrella review is us doing that reading for you.

What to do with this

Four steps, in order. Get a real answer on classification for every person who works at your home, from an advisor qualified to give one. Confirm the workers compensation requirement where each person works, with the state agency and with your advisor. Read your homeowners form for what it says about residence employees, and your umbrella for the employment wording. Then look at theft and money handling on their own, because habits do more for that one than any policy will.

Then send us the declarations pages. A coverage review is educational, has no pricing attached and no obligation, and often ends with us saying most of it is fine and two things are worth changing. If you want terms, start with a private client quote. The private client overview shows how this sits alongside the home, the vehicles, the collections and the liability, and the learning center collects the underlying answers.

Reviewed for insurance accuracy by Richard Sweet, owner of Vantage Point Risk and an independent insurance advisor. Last reviewed September 26, 2026. How we review this.