Workers' Comp for Household Employers: State Rules and Costs
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General information, not advice: this page covers tax and employment topics in general terms. It is not tax or legal advice, and reading it does not create a CPA–client relationship. Tax and labor rules vary by state and situation — consult a qualified professional for your circumstances.
If your nanny falls down your stairs and breaks an ankle, who pays the medical bills and lost wages? Most families assume their homeowners insurance covers it. It doesn’t — and in most states, you’re legally required to carry a separate workers’ compensation policy. This guide explains the gap, the state-by-state requirements (only states with a citable primary source are listed — everyone else gets “check your state”), typical costs, and how to buy coverage.
Why homeowners insurance doesn’t cover it
Homeowners policies cover guests — the delivery driver who slips on your porch, the friend who trips on your rug. Your nanny isn’t a guest; she’s your employee, and homeowners policies universally exclude workers’ compensation obligations. Some policies include a sliver of incidental coverage for occasional workers (the teenager who mows your lawn twice a month), but a regular household employee is excluded.
Without workers’ comp, an injured nanny’s remedy is a personal-injury lawsuit against you — with no cap on damages and, in many states, no ability to argue the worker was partly at fault. Workers’ comp is a no-fault trade: the worker gets medical bills and partial lost wages paid without proving fault, and you get protection from open-ended lawsuits. That trade is the entire point of the system, and it’s why states mandate it.
State requirements: only what we can cite
Workers’ comp is state law, and the rules for household employers specifically are narrower than the general “all employers must carry” rule. Below are only the states we can cite to a primary source. If your state isn’t listed, check your state labor department — we will not guess.
| State | Requirement for household employers | Source |
|---|---|---|
| California | Required. Every California employer using employee labor must carry workers’ comp (Labor Code § 3700). Penalties for going uninsured start at the greater of 2× the premiums you would have paid or $1,500 per employee, plus a stop order on using employee labor. | CA DIR employer FAQ |
| New York | Required if the employee works 40+ hours/week or lives in your home. Buy from a private carrier or the NY State Insurance Fund. Penalties for no coverage: up to $2,000 per 10-day period uninsured, plus misdemeanor/felony exposure. | NY DOL facts for employers (PDF) · penalties — NY Workers’ Comp Board (PDF) |
| Texas | Not required — Texas is the only state where workers’ comp is elective for private employers. But going without (“non-subscriber”) leaves you exposed to personal-injury lawsuits where you lose key legal defenses (assumption of risk, contributory negligence). Most household employers still buy it. | Texas Workforce Commission |
| All other states | Check your state labor department or workers’ comp board. Most states require coverage for household employees at low thresholds (often 1+ employee); a few exempt casual or very-part-time domestic work. | — |
A practical note on New York’s 40-hour rule: a nanny working 39 hours a week who picks up one overtime shift has crossed the threshold. If you’re anywhere near the line, buy the policy — the penalty math ($2,000 per 10 days) makes “we were at 38 hours” a bad bet.
What it typically costs
Reported ranges for household employers generally land around $200–$800 per year for a single full-time nanny, depending on state, wages, and the classification code the carrier assigns. That’s roughly 0.5–1.5% of payroll — the smallest line in the true cost of a nanny model, and the one with the most catastrophic downside if skipped.
Treat any number here as a reported range, not a quote. Your actual premium depends on your state’s rates and your payroll. The only number that matters is the one on a quote — which is why the CTAs on this page are “get a quote” links, not “buy now” links.
How to buy it: three paths
1. Through your payroll provider. Most nanny payroll services (see our comparison) offer workers’ comp referral or bundling — they partner with carriers and handle the paperwork. Easiest path if you already use a service; ask whether the policy is in your name and covers your employee specifically.
2. Direct from a carrier. You can buy a standalone household workers’ comp policy from carriers that write small policies. Two options that quote online for small employers:
- Get a quote from NEXT Insurance — online quotes, small-business focus.
- Get a quote from Hiscox — small-business specialist, online quoting.
Disclosure: NEXT and Hiscox pay a flat fee (reported at $25 per the programs’ published terms — verify current terms) per completed quote request made through publisher links. If you request a quote through our links, we may earn that fee at no cost to you. A quote is free and non-binding — get two and compare.
3. Through your state’s fund. Many states operate a workers’ comp state fund (New York’s is NYSIF) that must take all comers — useful if private carriers won’t write a tiny household policy in your state. Check your state workers’ comp board’s website.
Whichever path: confirm the policy’s effective date is on or before your employee’s first day, keep the certificate where you can find it, and tell your payroll provider you have it (some bundle payroll and comp reporting).
The decision framework
Ask yourself three questions:
- Does my state require it? If yes (most states), this isn’t a decision — buy before the first day of work.
- If my state doesn’t require it (Texas), can I self-insure the risk? A broken ankle with surgery can run $30,000–$50,000 in medical bills plus lost wages. A $300–$500 annual premium against that tail risk is cheap.
- Am I near a threshold? (NY’s 40 hours, any state’s casual-worker carve-out.) Thresholds are measured on actual hours, not scheduled hours. When in doubt, buy.
Workers’ comp is the least-discussed and most-asymmetric line item in household employment: a few hundred dollars a year against lawsuit exposure that can reach six figures. It’s also the one your homeowners agent won’t mention unless you ask — so ask.
If someone gets hurt: the reporting flow
Buy the policy before you need it, and know the drill for when you do:
- Get medical care first. Everything else waits. Workers’ comp covers reasonable medical treatment for work-related injuries regardless of fault.
- Report to your carrier promptly. Most policies require prompt notice — days, not weeks. Your carrier opens the claim and assigns an adjuster.
- Document what happened. Date, time, place, what the worker was doing, any witnesses. Write it down the same day; memories blur and claims don’t.
- Don’t admit fault or promise payments. You’re not being cold — you’re letting the no-fault system work. The carrier handles medical authorization and wage benefits.
- Keep paying the premium and keep records. A claim doesn’t cancel your obligation to maintain coverage, and your state may require injury records for several years.
The most common household-employer mistake here isn’t malice — it’s discovering at step 2 that there’s no carrier to call, because the policy was never bought. That’s the scenario this entire page exists to prevent.
Frequently asked questions
Does my nanny need to be full-time for workers’ comp to apply? Depends on your state. Some states cover all household employees; New York’s requirement kicks in at 40 hours/week or live-in status. Check the state table above — and remember that “part-time” is measured in actual hours, which creep.
What if my nanny already has health insurance? Irrelevant to your obligation. Workers’ comp is the employer’s coverage for work-related injuries; the worker’s health insurance doesn’t substitute for it, and health insurers routinely deny claims for injuries that happened on the job.
Can I just add a rider to my homeowners policy? Some homeowners carriers offer a workers’ comp endorsement for household employees — ask yours. But verify it actually satisfies your state’s workers’ comp law, not just your sense of coverage. An endorsement that pays medical bills but doesn’t meet statutory requirements leaves you exposed to the penalties above.
We’re in Texas and it’s optional. Really buy it? Run the expected-value math: a few hundred dollars a year in premium versus a non-subscriber lawsuit where you’ve lost the assumption-of-risk and contributory-negligence defenses. Unless you can comfortably self-insure a six-figure judgment, buy it.
Also read: The true cost of a nanny in 2026 (where workers’ comp sits in the full-year model) · Domestic worker overtime rules (hours thresholds interact with coverage thresholds in states like NY).
Heads-up: product links on this page are plain links to retailers. We may earn a commission from some in the future, at no cost to you — see our affiliate disclosure for details.