Red Flag: Insuring the Nanny Exposure
If your clients have a nanny (regardless of whether or not the nanny is a "live-in" or "live-out"), your clients are automatically exposed to greater liability and a more complicated insurance position. One of the reasons that the insurance position becomes more complicated after employing a nanny is because there's not a "right" way to do things.
The most obvious added exposure of having a nanny is the effect on the auto policy coverages should the nanny either drive or ride as a passenger in an insured auto. Depending on the factual scenario, coverage under your client's policy for losses can run the gamut from "covered" to "denied". Pretty specific, huh?
Adding to the complexity of the added auto exposure is the varied underwriting positions taken by different insurance companies on what can be done to address the exposure before the loss to try and mitigate the "denied" possibilities. No two companies seem to agree on exactly what should be done, but most all have an opinion and a course of action to follow (i.e. - it MUST be addressed specifically for each client).
What's often not as understood or addressed by most people is the added exposure to your clients' home insurance, personal liability, and/or excess liability policies. Again, there are too many issues to discuss here, but when completing your client's insurance review be sure that the nanny issue is addressed on the home insurance policy, too!
Finally, having a nanny is one of the most common example of one of our core philosophies: Risk management is NOT the same thing as insurance management. Both are important, but good risk management in employing a nanny is absolutely critical regardless of the insurance policy management issues. Incorporate this more holistic philosophy when addressing your clients' nanny issues.
Mechelsen, Inc. Darren McGraw, MBA, CIC mechelseninc.com
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