HOA workers comp insurance is a form of insurance coverage that community associations often neglect. However, its benefits can protect HOAs from potential liability and risk.
What Is HOA Workers Comp Insurance?
Homeowner Association Workers Compensation Insurance is a type of insurance that protects the HOA’s employees and volunteers. It helps shoulder the medical cost and lost wages in the event of a work-related illness or injury. Most HOA workers comp insurance policies cover only paid workers. However, some also cover volunteers and vendor employees. Hence, an HOA can also cover its committee and board members with the right insurance coverage.
Apart from these, some insurance policies with coverage for workers compensation for homeowners associations also offer death benefits for the dependents of the HOA’s employees. This compensates the bereaved families if the employee dies due to work-related incidents.
Is HOA Workers Comp Insurance Required?
Many states require businesses to have insurance coverage for workers’ compensation. It often becomes mandatory when a business employs a certain number of people. However, some states require it even if a business hires only one person. For instance, the state of California makes no-fault workers’ compensation insurance compulsory for employers even if the business only hires one employee.
These laws may seem to mandate this type of insurance for homeowners associations. On the other hand, despite working like a business, HOAs often don’t have the legal requirement to purchase workers’ compensation insurance. It’s usually optional, and there are no state-mandated coverage amounts for condo and homeowners associations.
Why Is HOA Workers Comp Insurance Important?
Does an HOA need workers comp insurance? While many homeowners associations can function properly without this type of insurance, it’s still a good policy to purchase. It offers multiple benefits.
1. Covering Vendor Employees
Homeowners associations work with many vendors to run the community. They may hire pressure washers, janitorial services, landscapers, and other contractors. These fulfill the HOA’s duty to keep property values high and protect the community’s interests.
However, these types of services carry certain risks with them. The employees of vendors that perform these jobs can suffer injuries while working within the HOA. While the contractor technically employs these employees, they can still hire an attorney and sue the HOA. This often happens when the vendor doesn’t have sufficient insurance coverage to protect their workers.
2. Financial Protection
Homeowners associations that employ personnel for various duties like groundskeeping, guarding gates, or other maintenance work will benefit from workers’ compensation insurance. That’s because it provides them with financial protection from compensating workers who sustain injuries or fall ill due to their jobs. They can also compensate the employees of their contractors who are affected by any workplace incidents.
Without proper coverage, the HOA may be held liable through a lawsuit. It may need to pay significant penalties that are much more expensive than what the insurance would cost. The HOA may need to tap into its reserve funds or levy hefty special assessments just to cover the costs. This is what makes workers comp insurance one of the most important types of HOA insurance an association needs.
3. Volunteer Coverage
Some HOA workers comp insurance policies cover volunteers. Hence, the HOA will not only be able to support paid workers but also unpaid workers such as committee members and board members. Homeowners associations with many volunteers should work closely with their insurance agents to ensure this is included in the policy.
How Much Coverage Is Necessary?
Homeowners associations that want more well-rounded coverage should purchase “If Any” insurance policies covering Voluntary Compensation (VC) Endorsement. This allows the HOA to protect the employees who might sustain bodily injuries from work-related tasks.
As for the amount, many states require employers to purchase a policy that covers at least $100,000 per bodily injury occurrence and $500,000 for diseases. However, the laws may vary per state so HOAs should review their state’s laws to verify the minimum requirements.
How Do HOAs Get Workers Comp Insurance?
Is workers comp insurance included in standard HOA insurance policies? Does homeowners insurance cover workers compensation? Unfortunately, most insurance policies for homeowners or HOAs do not cover workers compensation. Standard HOA insurance policies only offer General Liability coverage. This may cover the bodily injuries of HOA guests and homeowners, but it often excludes employees.
Some HOAs also mistakenly think that the insurance coverage of their management company is enough to cover vendors, contractors, and employees. However, a management company’s workers’ compensation insurance only covers the company’s workers. Its coverage will not extend to the HOA or the board that hired the company.
Hence, HOAs must purchase separate policies that cover workers’ compensation. They can do this by asking their current insurance provider if they can add more coverage. If not, they should look for insurance providers that offer this policy.
How Much Is HOA Workers Compensation Insurance?
The cost of this insurance policy varies per insurance company. It also varies depending on several factors, including an HOA’s size, job types, and the number of volunteers and employees. Insurance providers also look at the HOA’s past records to see how often workplace illnesses and injuries occur. This can increase the premium cost they charge.
That said, there’s no set amount for how much annual premiums will cost the HOA. Nonetheless, the premiums will certainly cost less than the financial penalties of workplace incidents.
Protect Your Community From Risks
HOA workers comp insurance is vital to protect the community from financial losses. After all, every HOA needs people to operate — and their jobs often carry certain physical risks. It’s better to be safe than sorry when it comes to protecting and compensating workers and volunteers. Otherwise, it could make the HOA financially unstable if it needs to levy heavy special assessments to cover the costs.
HOAs need lots of people to function properly. However, with HOA management software, an HOA can hire fewer people and reduce their liability for workplace incidents. Condo Manager is just the right software for the job. Contact us online or call us now at (800) 626-1267 to learn more!