Community associations operate with unique insurance needs, given their nonprofit status. One pressing question for Homeowner Association’s (HOA) board members often revolves around the necessity of workers’ compensation insurance. Despite the absence of traditional employees in some associations—relying solely on volunteer board members and external management companies—the answer remains a resounding yes; all HOAs should have workers’ comp insurance in place.
The rationale behind this mandate is complex. Firstly, HOAs often work with vendors. Whether vendors are contracted directly or through a management company, the risk is consistent if a vendor’s employee is injured. Many associations mistakenly assume the vendor would bear sole responsibility, but the law allows the employee to sue the HOA, especially if the vendor lacks proper workers’ comp insurance. Even diligent HOAs may face challenges if vendor coverage lapses or if false information is provided. Additionally, inadequate workers’ comp coverage can result in financial strain for the HOA, as they may be liable for costly medical expenses and legal fees. Therefore, ensuring proper insurance coverage is essential for protecting the association’s financial assets and reputation.
Regrettably, some associations overlook essential steps in the interest of saving time or money. They may disregard licensing and insurance requirements to engage cheaper vendors or deem certain tasks, like minor repairs, as unworthy of insurance coverage. However, having workers’ comp insurance in place can alleviate the financial burden associated with such common scenarios.
Another vital aspect of workers’ comp insurance for community associations concerns all volunteers of the HOA, including board members. Ensuring their adequate coverage is essential, as workers’ comp typically only extends to paid employees, leaving volunteers at risk in case of injury.
Consider a scenario where a board member sustains an injury while fulfilling a board-related duty, such as driving to file paperwork with the city. Similarly, non-board volunteers may seek workers’ comp coverage if injured during routine community cleanup efforts.
Therefore, despite the absence of traditional paid workers, workers’ compensation insurance remains essential for community associations to safeguard their assets and mitigate potential liabilities.
If you have any further inquiries about your community, reach out to us today and we’ll ensure your project complies with California law.
