Frequently Asked Questions
Household Employer Insurance FAQs
Q: Is workers’ compensation insurance required for domestic employees like nannies?
A: Yes, in many states, workers’ compensation insurance is legally mandatory for household employers, even if you only employ one person part-time. Requirements vary widely, so you must check your specific state laws regarding minimum hours or payroll thresholds. Failing to carry it where required can result in significant penalties and fines.
Q: What happens if I don’t have workers’ compensation and my household employee gets injured?
A: If an employee is injured without proper coverage, you, as the employer, will be held personally responsible for all their medical costs and lost wages. Additionally, your state may levy substantial fines for non-compliance, and you could face a direct personal lawsuit from the employee.
Q: Does my standard homeowner’s policy cover liability if my nanny sues me?
A: Most standard homeowner’s policies offer very limited or no coverage for employment-related liability claims, such as wrongful termination or discrimination. While they typically cover injuries from basic hazards (like a slip on ice), they almost always exclude claims stemming from the employment relationship itself.
Q: Does workers’ compensation cover wages for an employee who is injured and unable to work?
A: Yes, a primary function of workers’ compensation is to provide wage replacement benefits (also called indemnity) to the employee. This compensates them for a portion of the wages they lose while they are temporarily or permanently disabled and unable to perform their duties.
Q: What is Employment Practices Liability Insurance (EPLI), and do I need it as a household employer?
A: EPLI protects you against claims made by an employee regarding their employment, such as wrongful termination, discrimination, or sexual harassment. Even a small household can be sued, and EPLI is highly recommended for household employers to cover the steep legal defense costs associated with these claims.
Q: I use an LLC to pay my staff. How does that affect my insurance needs?
A: When an LLC is the official employer, the LLC must be the named insured on the workers’ compensation and EPLI policies. While the LLC offers some liability protection, you must still ensure the policies are correctly set up under the LLC’s name and EIN to cover its obligations.
Q: If I hire an independent contractor (like a cleaning service), do I still need to insure them?
A: Generally, no, you are not required to provide workers’ compensation for a legitimate independent contractor. However, you should always verify that the contractor carries their own liability and workers’ compensation insurance and obtain a certificate of insurance from them for your protection.
Q: What is the difference between my state’s disability insurance and workers’ compensation?
A: Workers’ compensation covers lost wages and medical costs only if the injury or illness is work-related. State disability insurance (like New York’s DBL) provides short-term wage replacement for an illness or injury that is not work-related, such as a non-work injury or maternity leave.
Q: How do I ensure I obtain the right workers’ compensation insurance coverage to meet my state’s requirements?
A: You should work with an insurance partner who is knowledgeable about your state’s specific labor laws (like GTMIA!). States often mandate workers’ compensation coverage regardless of hours worked and may require specific EPLI endorsements to cover required anti-discrimination or anti-retaliation provisions.
Business Insurance FAQs
Q: What business lines does GTMIA offer?
A: We offer to review all insurance risks for potential placement.
Q: What is the difference between general liability and professional liability?
A: General liability covers bodily injury and property damage that occur because of your business operations or premises, like a slip-and-fall accident. Professional liability (or Errors & Omissions) covers financial damages and legal defense costs resulting from mistakes, negligence, or failure to perform a professional service promised to a client.
Q: Is commercial property insurance necessary if I lease my office space?
A: Yes, it’s still necessary. While your landlord’s insurance covers the building structure, you need commercial property insurance to protect your business’s assets, such as furniture, computers, inventory, and equipment inside the leased space.
Q: What factors determine the cost of my Business Owner’s Policy (BOP)?
A: The cost of your BOP is determined by several factors, including your industry risk profile and your revenue and payroll. Other factors include the value and location of your property, your claims history, and the limits and deductibles you select for coverage.
Q: Is cyber liability insurance truly necessary for a small business that only processes credit cards?
A: Yes, it is necessary. Processing credit cards means you handle sensitive financial and customer data, making you a target for cyberattacks, malware, and data breaches.
Q: What does commercial umbrella insurance cover, and at what point should my business consider it?
A: A commercial umbrella policy provides an extra layer of liability protection above the limits of your primary policies. Your business should consider it when your contract requirements mandate higher limits or when your total business assets and potential loss exposure exceed the limits of your underlying policies.
Q: What are the insurance implications if I have employees who work remotely across multiple states?
A: You must ensure you have workers’ compensation coverage in every state where an employee regularly works, as requirements vary drastically. Furthermore, your liability and employment practices (EPLI) policies should be reviewed to confirm coverage for claims filed under each state’s labor laws.
Q: How does pay-as-you-go workers’ compensation help my business?
A: This is associated with workers’ compensation policies to pay the premium based on your payroll for that pay period. This is helpful for businesses that may have fluctuating payroll during the year. It avoids an extensive audit due at the end of the year.
Personal Insurance FAQs (Home, Auto, Umbrella)
Q: What is the primary benefit of bundling my home and auto insurance, beyond the discount?
A: The primary benefit is a streamlined claims process and simplified financial management. By having one carrier, you only have to deal with one claims department and one adjuster if a single event (like a severe storm) damages both your home and your vehicle.
Q: How much personal liability coverage do I need on my homeowner’s policy?
A: You generally need enough personal liability coverage to cover your total net worth, including the value of your assets and future earnings.
Q: What is a personal umbrella policy, and why is it considered crucial for asset protection?
A: A personal umbrella policy provides an extra layer of liability coverage (typically $1 million or more) that sits above the limits of your homeowner’s and auto policies. It is crucial because it protects your total assets from large, devastating lawsuits that exceed the limits of your underlying insurance.
Q: What is the difference between the actual cash value and the replacement cost coverage for my home?
A: Actual Cash Value (ACV) pays the cost of replacing damaged property minus depreciation due to age and wear. Replacement Cost Value (RCV) pays the full cost to rebuild or repair your home with new materials of similar quality, without subtracting any depreciation. RCV offers superior protection.
Q: Will my homeowner’s policy cover my deductible if I file a separate claim on my auto insurance?
A: No, your homeowner’s policy will not cover the deductible for a separate claim filed on your auto insurance. Deductibles are a form of self-insurance, and you are responsible for paying the deductible for each individual policy claim.
Q: What type of coverage do I need for high-value items like jewelry, art, or fine collectibles?
A: You need a separate scheduled personal property endorsement (also called a “floater”) added to your homeowner’s policy. Standard policies have low limits for these items and often exclude common risks like mysterious disappearance, which a floater covers. You can read more about high-net-worth insurance here.
Q: Should I choose a lower deductible or a higher deductible on my homeowner’s policy?
A: This depends on your financial stability and risk tolerance. A higher deductible reduces your premium but means you pay more out of pocket for smaller claims. A lower deductible results in higher premiums but reduces personal expenses in the event of a major disaster.
Q: What changes to my personal life (like marriage or new construction) require an immediate review of my policies?
A: Major life changes like marriage/divorce, new construction or significant renovations, and purchasing new high-value assets require an immediate review.
