Many working parents have had their various issues and complaints with daycare and childcare centers. As an alternative to these forms of childcare, more and more parents are choosing to hire their own nanny or share one with another parent. However, many parents aren't fully aware of the many financial risks involved with bringing a nanny into their home.
When you hire a nanny, you've basically just become an employer. Did you know that your new nanny could cause you IRS problems if you improperly pay him/her and not withhold payroll taxes? Even if you withhold payroll taxes, you can still find yourself facing some costly penalties and fines if they aren't calculated correctly and submitted on time. One way to eliminate this risk is by hiring a payroll provider to appropriately handle the taxes, just as any other employer would do.
Another financial risk is being sued by your nanny following an injury on the job. This risk of injury is why it's prudent to purchase worker's compensation. Otherwise, you'd be responsible for paying all the benefits that your nanny would've received under such a policy and any penalties or fines that your state might impose. Before you falsely assume that your nanny's injury would be covered by your umbrella liability policy or homeowner's policy, it won't. These policies typically exclude any injury where workers' compensation would normally be due to the injured party.
However, you will need an umbrella policy that includes excess employer's liability coverage beyond that provided by worker's compensation coverage. Your nanny's spouse, children, or other family members could initiate a lawsuit for loss of his/her services if your nanny is injured on the job. Employer's liability coverage is provided under workers' compensation coverage, but lawsuits of this nature can easily exceed the limits.
One final concern would be from another parent's child being injured while under the care of a nanny at your home. Even if the parent was involved in the vetting and hiring process of the shared nanny, you could still be sued by them for the child's injury. If you share a nanny with another family, then you'll want to ensure that your personal umbrella limits are high enough to adequately protect your assets.
If you want to avoid all the liabilities and insurance concerns, but still have the benefit of a personal nanny, then you might consider using an agency nanny. When you hire a nanny through a service or agency, the nanny is their employee, not yours. This puts the responsibility of payroll taxes, insurance coverage, background and reference checks, and so forth on their shoulders, not yours. Some agencies will even have added perks, such as having an equally qualified nanny on standby for times when your regular nanny isn't available. Considering that you can avoid the countless hours interviewing nannies, potential liability risks, and the need for various costly insurance policies, the additional fees associated with a nanny service may be well worth it to you in the long run.
If you have questions or concerns on this issue, do not hesitate to call Zeiler Insurance and speak to one of our customer service representatives. As an independent agency, Zeiler Insurance prides itself with quality customer service for the people of the Chicago-land area and the rest of the Midwest. Customer or not, we can review your insurance and see if you are being protected appropriately for the right price.