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Your Homeowners Association has no employees and your legal documents require that you carry Workers Compensation insurance. Sounds strange doesn't it? Not necessarily, when you consider the following:
Do you hire Independent Contractors?
Normally, when you hire an Independent Contractor, the contractor is responsible for its own employees. However, when a contractor neglects to maintain the required insurance, a sick or injured employee can try to collect directly from the Association even though he or she is not an Association employee.
Obtaining proof of Workers Compensation insurance is always a good practice. However, that certificate offers no guarantee that the coverage will remain in effect beyond the date it was issued. Although the Contractor's insurance company is required to notify you if the coverage lapses, most certificates of insurance do not guarantee timely notification of the policy's cancellation.
Think that you are still protected under the Contractor's hold-harmless agreement? Under this type of agreement, the Contractor guarantees to protect your Association from liability for injuries and illness of its employees. Unfortunately, the agreement is only as good as the Contractor's financial strength and in some states, it's not even recognized by the courts.
Do you hire part-time or seasonal employees?
Where Workers Compensation is concerned, what appears to be an Independent Contractor relationship can often be interpreted as an employment relationship. If an injured worker is uninsured, the Workers Compensation Commission will occasionally lean toward declaring an employment relationship despite your agreement or understanding with the injured party. Sounds unfair? Perhaps, but it's a serious risk that one should insure against.
So to eliminate the possibility of paying for injuries out of your own pocket, get a Workers Compensation policy. Certain types of coverage are not available in all states, so check with your local insurance agent for advice and recommendations.
