Will Homeowners Insurance Cover An Injured Contractor?

Homeowners will occasionally hire someone to do work at their home on a full-time, part-time, or one-time basis, such as housework, painting, landscaping, etc. If an employee or independent contractor is harmed or injures another person, the Homeowners Liability or Workers' Compensation policy may provide compensation. This depends on the policies' availability and state Workers' Compensation legislation.

Although a Homeowners Insurance may cover injuries to such workers, there are certain benefits to acquiring a Worker's Compensation policy:

Workers' Compensation benefits may be required under state workers' compensation statutes.

A homeowner's policy's coverage is restricted to the policy limitations, which may not be enough in major injuries, permanent disability, or even death.

Workers' Compensation Insurance provides more comprehensive coverage, including disability compensation and potentially unlimited medical bills.

Suppose the state does not mandate Workers' Compensation coverage or it is not supplied voluntarily. In that case, the Homeowners insurance may cover lawsuits brought by injured workers or pay for medical bills if no lawsuit is brought. However, there are three crucial provisions in the Homeowners insurance to be mindful of:

For coverage to be available, the wounded worker must meet the definition of a resident employee. A residence employee is either an insured employee or an employee leased to an insured by a labor-leasing firm whose tasks are related to the maintenance or use of the residence premises. They are also considered a person who performs equivalent duties elsewhere that are not related to the insured's business.

For bodily injury coverage, the Liability employment exclusion applies to any person qualified to receive any benefits voluntarily supplied or compelled to be provided by an insured under any of the following:

Law governing workers' compensation
Law on non-occupational disabilities
Law on Occupational Disease

The preceding exclusion means that if the insured homeowner voluntarily gives or is compelled by law to provide Workers' Compensation benefits, there will be no liability coverage for cases brought by workers or contractors against the homeowner. Liability coverage under the Homeowners insurance policy would be available if the homeowner does not give Workers' Compensation benefits or if the law does not apply. The homeowner's coverage would most likely respond if a third party was hurt by the employee/contractor and sued the homeowner. However, because the employee/contractor is not an insured for liability coverage, the employee/contractor will not be covered for claims brought against him/her by third parties.

Any compensation to any person eligible to receive benefits voluntarily provided or required to be delivered under any of the following:

Law governing workers' compensation
Law on non-occupational disabilities
Law on Occupational Disease

This exclusion indicates that if the employee/contractor is qualified for benefits voluntarily offered or mandated by law, there will be no medical payments coverage for the injury. This is true even if the employee/contractor is qualified for Workers' Compensation benefits from any source, including if Workers' Compensation was required by law but was not delivered.

Although a Homeowners policy gives some coverage, and an Umbrella policy may be necessary to help enhance limits, a Workers' Compensation policy provides a broader coverage. It is highly recommended, especially if the individual recruited may be considered an employee.