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Suppose your condo association has no employees to speak of. Suppose all work is performed by contractors carrying their own liability insurance. Suppose all condo association members are volunteer. So why would you need workers compensation insurance?

Some states take a very broad view of the definition of “employer-employee” relationship under workers compensation coverage and claims. If your association has any volunteers on staff, you could be setting yourself up, in appearance, for the law to define your relationship as employer-employee. Your volunteer is instructed by your board to complete work that causes injury to the volunteer. Your general liability policy will more than likely not cover such activity because under the general liability description on your condo association insurance policy, those completing work for your association are generally not included or may be specifically excluded.

So do you get workers compensation coverage just in case? This is the fine line condo associations walk when dealing with non-employee volunteer work. Workers comp rates are high, so the instinct is to take a chance. However, your state may interpret such work as a loss under workers comp laws, such as California does. In that case, your association may owe not just workers compensation coverage, but also state fines for not having appropriate coverage. Both could be quite substantial should the injury be severe.

If your state’s interpretations are less broad, there may not be an issue. However, most condo association insurance companies would rather the condo association opt on the side of caution and carry even minimal workers compensation coverage to protect the policy holder from unseen claims and loss exposures.

Talk to your condo association insurance broker, who should be well versed in your state’s laws and requirements. Make sure any relationship you have with your volunteers or other people performing work on or for your property are adequately covered in the event of an accident or injury. Your broker can direct you to products that can help mitigate this gap in coverage.

Flickr photo credit: Stephen-Korecky