Workers’ compensation insurance provides wage replacement and medical benefits to individuals injured while performing job-related duties. In exchange for these benefits, the injured party typically waives their right to sue for negligence.
In the HOA context, workers’ compensation operates similarly to any other workplace—but with a unique twist. Even if the HOA doesn’t directly employ staff, it can still be held liable for injuries to people who are working on its behalf, including volunteers, board members, and contractors. If an HOA lacks proper coverage, it may end up paying for medical costs and lost wages out of its own reserves, or worse, through a costly lawsuit.
Many associations assume that if they don’t directly hire employees, they don’t need workers’ comp. This assumption can be dangerous. Consider the following common scenarios:
In many states, businesses are required to carry workers' compensation insurance once they employ a certain number of workers. For instance, in California, even a single employee mandates coverage. However, HOAs aren’t always classified the same way as traditional businesses, so the rules can vary.
That said, just because it’s not always legally required doesn’t mean it’s not essential. Even in states where workers’ comp is optional for HOAs, securing coverage is a smart move for risk management. Coverage levels should reflect the number of contractors, staff, and volunteers active in the community, and should be determined with guidance from an experienced insurance provider.
It’s a common misconception that an HOA management company’s insurance automatically covers the HOA as well. In reality, the management company’s policy applies only to its own employees and operations. The HOA remains a separate legal entity and needs its own workers' compensation policy to cover its unique responsibilities and exposures.
Before hiring any vendor or contractor, HOAs must verify that the vendor carries active workers’ compensation insurance. This should be documented through a current Certificate of Insurance. Failure to do so could result in serious liability if a vendor’s worker is injured while on the job.
Some risks to watch out for include:
Standard policies may not automatically cover volunteers or board members unless a Voluntary Compensation (VC) Endorsement is included. This endorsement ensures that unpaid individuals injured while performing HOA duties are still eligible for coverage.
For example, if a board member is walking the community grounds and suffers a serious fall, the HOA could face a significant claim. With proper coverage—including a VC Endorsement—such claims are handled by the insurance company rather than draining HOA reserves.
The “If Any” Workers’ Comp Policy
An “If Any” workers’ comp policy is designed for organizations that don’t currently employ workers but still want to protect themselves in case liability arises. This policy is particularly useful for HOAs that rely heavily on vendors, volunteers, or short-term contractors.
Policies with a Voluntary Compensation Endorsement ensure broader protection and can be surprisingly affordable—often around $500 to $600 annually. Compared to the risk of a six-figure claim, this is a small price to pay for peace of mind.
Most states recommend or require minimum coverage limits, often starting at $100,000 per occurrence for bodily injury and $500,000 for bodily injury by disease. However, your association’s needs may exceed these minimums depending on its size, geography, and activities. Your insurance provider should help determine the right coverage limits and structure.
Real-World Examples of Why Coverage Matters
Consider these actual claims paid out under workers’ compensation programs for community associations:
These are not rare occurrences. Without adequate insurance, these costs would fall on the HOA and, by extension, the homeowners.
Securing workers’ compensation insurance is about more than checking a box—it’s a key part of safeguarding your HOA’s financial stability and limiting legal exposure. Even in communities that don't employ full-time staff, the risks posed by vendors, volunteers, and board members are very real.
By conducting annual insurance reviews, requiring Certificates of Insurance from all vendors, and working with your insurance provider to tailor a comprehensive policy—including an “If Any” endorsement—your board can ensure the HOA is protected from the unexpected.
Workers’ compensation insurance is one of the most overlooked yet essential tools in an HOA’s risk management strategy. Without it, even a single injury could result in tens of thousands of dollars in liability. The cost of coverage is minor compared to the potential fallout of an uninsured claim.
If your HOA needs help evaluating its insurance needs or managing vendor compliance, working with an experienced property management company can provide the guidance and structure required. Gordon James Realty offers comprehensive HOA management services, including insurance coordination and risk mitigation. Contact our team today to learn how we can help protect your community.
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