Nanny Liability Insurance: Protecting Your Family

When you hire a nanny, you become a household employer. That comes with legal obligations and liability exposure that most families do not think about until something goes wrong. A nanny who slips on your wet kitchen floor and breaks her wrist. A child in your nanny's care who is injured at the playground and the other family sues. Your nanny driving your car to pick up the kids and getting into an accident. Each of these scenarios creates financial liability that could reach six figures without proper insurance.

This guide covers the insurance policies household employers should carry, what they cost, and how to set up coverage before your nanny starts. It is part of the broader employment framework in our complete nanny hiring guide.

Workers' Compensation Insurance

Workers' compensation insurance covers medical expenses and lost wages if your nanny is injured on the job. In most states, household employers are legally required to carry this coverage once their employee works a minimum number of hours per week (typically 16 to 20 hours) or earns above a threshold amount.

What Workers' Comp Covers

• Medical expenses for work-related injuries or illnesses
• A portion of lost wages during recovery (typically 60% to 67% of regular pay)
• Rehabilitation costs
• Disability benefits for permanent injuries
• Death benefits in the most extreme cases

Cost

Workers' comp premiums for household employees typically run $300 to $800 per year, based on your state's rates and the nanny's annual wages. Some states operate a state fund where you purchase coverage directly. Others require you to buy through private insurers. Your homeowners insurance carrier may be able to add a workers' comp endorsement to your existing policy for a reduced premium.

What Happens Without It

If your nanny is injured on the job and you do not carry workers' comp, you are personally liable for all medical expenses and lost wages. In states where coverage is mandatory, you also face fines of $1,000 to $10,000 or more and potential criminal penalties. Beyond the legal risk, a single serious injury could result in medical bills exceeding $50,000.

Umbrella Liability Insurance

An umbrella policy provides an additional layer of liability protection above your homeowners and auto insurance limits. It covers scenarios that your primary policies may not fully address, such as a lawsuit resulting from an injury in your nanny's care or a significant auto accident while driving your vehicle.

Why It Matters for Nanny Employers

• Provides coverage above your homeowners liability limit (typically $300,000 to $500,000)
• Covers legal defense costs, which can be substantial even for frivolous claims
• Protects personal assets (home equity, savings, investments) from judgment creditors
• Covers incidents that may occur outside your home while the nanny is on duty

An umbrella policy providing $1 million in additional coverage typically costs $200 to $500 per year. For high-net-worth families, $2 million to $5 million in coverage is common and costs $300 to $1,000 annually.

Auto Insurance Considerations

If your nanny drives your vehicle or their own vehicle while on duty (to transport children, run errands, or commute between activities), auto insurance needs attention.

Nanny Driving Your Vehicle

Most personal auto policies cover permissive drivers (people you give permission to drive your car), but coverage limits and exclusions vary. Contact your auto insurer to confirm that regular use by an employee is covered under your policy. Some insurers require you to add the nanny as a listed driver, which may affect your premium.

Nanny Driving Their Own Vehicle

If the nanny uses their own car for work-related driving, their personal auto policy is primary. However, if their coverage is insufficient, your umbrella policy may provide secondary coverage. Verify that your nanny carries adequate liability coverage, typically at least $100,000/$300,000 in bodily injury coverage, and request proof of insurance.

Homeowners Insurance Review

Notify your homeowners insurance carrier that you have a household employee. Some policies provide limited liability coverage for injuries to employees, while others exclude employee injuries entirely (requiring separate workers' comp). Your insurer can confirm your current coverage and recommend any necessary adjustments.

Insurance Checklist for Nanny Employers

1. Determine your state's workers' compensation requirements for household employees
2. Purchase workers' comp coverage before your nanny's first day of work
3. Review your homeowners insurance liability limits and notify your carrier
4. Consider an umbrella liability policy, especially if your assets exceed your homeowners liability limit
5. Verify auto insurance coverage if the nanny will drive your vehicle or their own for work purposes
6. Request proof of the nanny's personal auto insurance if they will drive their own car on duty
7. Document all insurance policies in your nanny contract

The total annual cost of proper insurance coverage for a household employer is typically $500 to $1,300, which represents less than 2% of the total cost of employing a nanny. For detailed cost information, see our nanny cost guide.