Back on April 2, 2013, we posted information about the importance of an Association maintaining Workers
Comp coverage - even if it did not have employees or permit volunteer
activity. We have had several questions (which we love!) on this topic, so this post is a follow up!
To clarify, there are two primary
types of Workers Comp that a Board can purchase for the Association:
Volunteers and Committee Members
As the name implies, this type of
insurance would cover all people acting on behalf of the Association who are
not compensated by the Association. If
the Social Chair is injured while hanging Holiday Decorations or a Board member
falls while changing a light bulb - they would be covered under this type of
Works Comp policy. Liability limits are generally $1 million but can be
underwritten for higher. Premiums
typically start in the $750 - $850 range.
Payroll Driven
These policies are underwritten
for people who are working on behalf of the Association, are compensated and
are not covered under their own policy.
To underwrite, the insurance company will need to have an estimated twelve
(12) month payroll for the vendor. They
will also require a description of the duties of the contractor(s). The premium would then be based on both the
payroll and job duties. The contractor(s)
would be placed into a worker’s comp rating code that most closely matches the
provided job description. The riskier
the duties, the higher the rating and resulting premium. At the end of the policy period, the insurer
will require accounting proof from the Association of the actual payroll
dollars paid to the contractor(s). If
the actual is higher than the estimate, additional premiums will be due. Conversely, if the contractor was paid less
than the estimate, a premium credit would be given by the carrier. Multiple contractors can be covered under the
same policy if their duties are similar.
The Board should work closely
with their agent to identify the type of coverage best suited to fit their
objective. Make sure the payroll driven
coverage does not over or understate the job duties of the contractor and
accurately projects expected compensation levels.
Although “Payroll Driven” Workers
Comp is a higher priority, Access Management strongly encourages all Associations to obtain both types of coverage due to the potential risk. While a current Board of Directors may
prohibit any type of volunteer activity, unauthorized volunteerism and future
Board decisions do expose the Association to liability. Consult with your legal counsel and insurance
broker about this urgent issue.
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