Employment of Domestic Staff

Why it matters for underwriting

A household employing a cleaner, nanny or gardener takes on legal obligations that a household without staff does not face, most importantly registering the employee for mandatory accident and social insurance and bearing employer’s liability for injuries the employee suffers in the course of their work, such as a fall from a ladder while cleaning windows or a cut sustained while using garden machinery. Underwriters need to know whether domestic staff are employed, how many hours they work and what wage sum is paid, because these facts determine whether the household’s private liability cover needs an employer’s liability extension and whether mandatory accident insurance obligations have been met, both of which affect the household’s overall risk profile and its exposure to costs that would otherwise fall outside a standard personal lines policy.

Capturing the attribute and evidence

Proposal forms ask whether the household employs domestic staff, the type of work performed, weekly hours and the annual wage sum, and whether the household is registered as an employer with the relevant social insurance and accident insurance schemes. Underwriters corroborate the declaration with the employment contract, confirmation of social insurance and accident insurance registration, and payroll records showing the wage sum actually paid, since informal or undeclared employment arrangements carry materially different exposure than a properly registered one, and since the true weekly hours worked can drift upward over time without a corresponding update to the declared wage sum.

Effect on coverage, premium and conditions

Household liability policies typically extend to cover the household’s obligations as an employer of domestic staff, but this extension may require the wage sum to be declared accurately and often carries a condition that the household maintains the legally required social and accident insurance registration throughout the policy period. Undeclared or informally employed staff can result in a coverage gap for employer’s liability claims, since the household would otherwise be exposed to accident costs that mandatory insurance is specifically designed to absorb, leaving a potentially significant uninsured liability if an injury occurs.

Mitigation measures

Households reduce employer’s liability exposure by registering domestic staff with the appropriate compensation fund and accident insurer promptly upon hiring, keeping employment contracts and wage records current, and reviewing the declared wage sum whenever hours or pay change so the registration remains accurate. Providing clear safety instructions for tasks involving ladders, cleaning chemicals or garden machinery, and supplying appropriate protective equipment where relevant, further reduces the frequency of workplace accidents among domestic staff and the likelihood of a disputed claim.