Becoming the CEO of Your Personal Life –
A Personal Insurance Series: Insuring Your Nanny

Private Client Group

When it comes to risk management and insurance, it’s important to apply your business best practices to your personal life as well. All too often, we overlook assessing our risks and updating our insurance when we make lifestyle changes, grow our wealth, and add (or delete) valuable assets. In this series, we will discuss common sense steps that you can take to be an effective CEO of your personal life.

You officially become an employer when you hire a nanny to help care for your children. By its very nature, the relationship is personal, even familial, and people easily overlook the employer/employee aspect. However, it’s important to know how a nanny increases your risk exposure and how your personal insurance can help you manage those risks.

Auto

Your nanny drives your children as a part of her duties. Here are three considerations:

• Ask that she provide you with a copy of her motor vehicle report (obtainable from the DMV), so that you know her driving record is acceptable.
• Your auto insurance is primary if the nanny drives your auto(s). Add her to your policy as a permissive driver. Your broker will need her name, date of birth, and license number.
• The nanny’s insurance is primary if she drives her own auto on the job. However, you could be named in a lawsuit if her liability limits are inadequate. Keep in mind that many people, especially young adults, carry only the minimum liability limits required by law, which can be woefully inadequate.

Umbrella Liability

An umbrella policy is designed to protect your assets, financial security, and lifestyle in the event of a rare-but-severe liability claim. It could come into play if your nanny causes injury or damage to others while she is on the job. The most likely scenario involves a severe auto accident. You could also be held liable if a friend’s child is seriously injured during a playdate supervised by your nanny. When you hire a nanny, review your umbrella limit and determine if it should be increased.

Employment Practices Liability (EPL)

You may consider your nanny a member of the family, but she is an employee who can file a lawsuit if she believes that she has been treated unfairly. EPL coverage protects you against allegations of wrongful employment acts, including discrimination, sexual harassment, and wrongful termination. Coverage includes defense costs, even if you are falsely accused. Coverage often includes reputation protection, which pays for the services of a public relations firm if your nanny goes public with her allegations.

Workers’ Compensation

You may be legally required to provide workers’ compensation coverage for your nanny’s injuries on the job. Requirements vary from state to state, but your insurance broker can advise you and help you obtain coverage if needed.

Theft

A nanny is an especially trusted employee since she is charged with the safety and well-being of your children. Ironically, that very trust creates opportunity for theft, from minor pilfering to major crimes.

• Insure your jewelry, fine art, and other valuables on a collections policy, which includes theft and mysterious disappearance with no deductible.
• Be sure that your homeowner policy includes identity theft and/or cyber coverage. These coverages pay for expenses resulting from identity and cyber fraud. Some insurers cover the actual financial loss as well as incurred expenses.

Most people develop close, trusting relationships with their nanny and the experience creates fond, lasting memories for all. However, it’s important to recognize your role and responsibilities as an employer, and protect your financial security if there is an unfortunate accident or the relationship goes awry.

Our insurers offer services that help clients perform their employer responsibilities efficiently and professionally. These include background checks for prospective employees; interviewing tips; and advice on crafting documents — employment agreements, employee manuals, and confidentially agreements.

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