I got too busy, so I paid my neighbor, Sarah, $20/walk to handle my overflow. I didn’t put her on payroll; I just Venmo’d her as an “Independent Contractor.” Sarah lost a dog. The owner sued me. My insurance denied the claim because Sarah wasn’t an “Insured” on my policy, and Sarah had no insurance of her own.
Key Takeaways
- The Uninsured Subcontractor: If you hire a contractor, they must have their own insurance. If they don’t, and you didn’t add them to yours, the claim is denied.
- Employee vs. Contractor: In 2026, the Department of Labor uses AI to audit gig workers. If you control Sarah’s schedule and provide the leash, she is an Employee. Misclassifying her voids your insurance and gets you fined by the IRS.
- Vicarious Liability: You are responsible for who you send. The client hired you, not Sarah.
- Adding an Employee is Cheap: It often costs just
50−50−100/year to add a staff member to a PCI or BIC policy.
The “Why” (The Trap): Definition of “Insured”
Your policy covers “You” (The Named Insured).
It covers “Your Employees” (if you pay payroll taxes).
It does NOT cover “Random people you Venmo.”
Most policies have a specific exclusion for “Independent Contractors” unless you have a certificate of insurance (COI) on file for them.
[IMAGE: Checklist showing “Employee” (W2) vs “Contractor” (1099) insurance requirements]
The Investigation: I Called Them
I asked, “I have a helper. Is she covered?”
1. PCI
- The Answer: “Only if you add the ‘Additional Insured – Employee/Independent Contractor’ bundle.” It costs extra. If I don’t pay the upgrade, Sarah is a ghost to them.
2. State Farm
- The Answer: Strict. They want to see W2s. If I say she’s a contractor, they require me to show her proof of insurance.
3. Workers Comp Board
- The Reality: Even if liability covers the dog, if Sarah gets bit, she can sue me for Workers Comp benefits. Since I didn’t pay in, I pay out of pocket + penalties.
Comparison Table
| Status | Your Policy Covers Them? | Requirement |
| Employee (W2) | Yes | Must be listed on policy |
| Contractor (1099) | NO (Usually) | Must buy “Indep. Contractor” upgrade |
| Unpaid Helper (Spouse) | Maybe | Check “Volunteer” clause |
Step-by-Step Action Plan
- Decide: W2 or 1099? If you tell them when/where to walk, make them a W2 Employee.
- Call Insurance: “I am adding a staff member.” Pay the $50 fee. Get the new Declarations Page listing them.
- Get Sarah’s COI: If she really is a contractor (has her own business), demand a PDF of her insurance certificate before she touches a dog.
- Background Check: Insurance often requires background checks for employees to validate the Bonding coverage.
FAQ
Can my husband help for free?
Most policies cover the “Spouse of the Named Insured” automatically. But check the definition page.
What if I just give her cash?
That’s off-the-books labor. If a claim happens, you are admitting to tax fraud and insurance fraud to get it covered. Don’t do it.
Does Rover cover my substitute?
NO. Rover profiles are individual. If you send someone else, the Guarantee is void.