“On the eighth day of Christmas my true love gave to me eight maids a milking, seven swans a swimming, six geese a laying, five gold rings, four collie birds, two French hens, and a partridge in a pear tree.”
You’d think by now that I’d get the hint that I was receiving something for the eighth day of Christmas, well I did. I was in fact scared to death. The very last thing that I needed in my back yard was eight maids with their eight cows a milking away. I awoke in the morning in a panic and was relieved to discover that the maids didn’t come with cows.
However, that doesn’t mean that they didn’t come without problems. I didn’t have any insurance to cover these household employees. My homeowner’s insurance specifically excludes all business related activity from coverage under the liability section of the policy. It provides no workers’ compensation insurance, nor does it protect me if one of the eight maids decides to sue me for: wrongful termination, discrimination, harassment – sexual or otherwise- and privacy breaches; and I’m just getting started.
The exposures created when you decide to hire a household employee are tremendous and varied. Some people even go so far as to hire undocumented workers, or fail to make sure that all contractors on the property have workers’ compensation insurance; this exposes them even further to issues of tax and employment practice claims. None of this, and let me repeat: None of this is covered by your homeowner’s insurance policy. These eight maids – without their cows – just created a lot of exposure. I could be sued for millions.
How do I protect myself? I need an Employment Practices Liability Insurance Policy (EPLI). I can choose coverage limits from five hundred thousand all the way up to five million. This policy will offer me the broadest coverage. However, it is not necessarily cheap and I will have a deductible to pay in the event of a claim, this deductible could be as high as twenty-five thousand dollars.
Alternatively, I could ask my insurance agent to endorse my current homeowners’ policy to add employment practices liability coverage. The endorsement is not overly expensive and the premiums will be lower; but, coverage will be more restrictive and the maximum number of employees allowed will be closer to four or five, more than the eight that my true love gifted me.
It looks like I need to have a long conversation with my insurance agent.