Do we need workers compensation for live-in staff?

Almost certainly, and the arrangement complicates two things at once. Workers compensation requirements are set by state and generally reach employees regardless of whether they live on site, so the starting assumption should be that coverage is required rather than that a live-in arrangement is an exception.

The harder question is wage and hour. Live-in and sleep-time arrangements are among the most heavily litigated areas of the Fair Labor Standards Act, and the rules on what counts as compensable time are technical enough that informal arrangements frequently do not survive examination.

Most employment practices policies exclude wage and hour damages entirely and give back only a small defense sublimit, so this is an exposure to manage operationally rather than to insure. Have the arrangement reviewed by employment counsel before it becomes a claim.