Workers’ Compensation for Associations With No Employees

Part of the Insurance Warehouse Coverage Explained series: what each piece of an association’s insurance program does, in plain English.

Most associations have no employees, so boards assume workers’ compensation does not apply to them. It does. Volunteers who do work for the association, contractors whose own coverage has lapsed, and the handyman the state decides was really an employee can all produce a claim that lands on the association. A workers’ compensation policy written on an if-any basis costs little and closes that gap.

Who it protects

• Volunteers. A board member who falls off a ladder changing a bulb in the clubhouse is doing work for the association.
• Unit owners who help. Shoveling a common walkway, running an event, painting a fence.
• Uninsured contractors. When a contractor’s coverage has lapsed and a worker is hurt, the association can be treated as the employer.
• Anyone paid directly. A seasonal pool attendant or a part-time caretaker paid by the association is an employee.

Why an association with no payroll still needs it

Minnesota’s workers’ compensation law casts a wide net over who counts as an employee. When someone is hurt doing work the association directed and there is no other coverage, the claim can be made against the association, and the medical bills and lost wages come out of the operating account. Most property management companies will not take on a community without the policy, and lenders sometimes ask for it as well. Compared with the cost of one injury, the premium is small.

What it costs and how it is written

• Written on an if-any basis. Premium is based on payroll. With none, the policy is written at the carrier’s minimum, often a few hundred dollars a year.
• Audited at the end of the term. If the association paid anyone directly during the year, the audit adjusts the premium. If not, nothing changes.
• Employer’s liability limits. Many managers require $500,000 per accident, $500,000 per employee for disease and a $500,000 policy limit. If your manager sets a requirement, we write the policy to match it.

Where boards get surprised

• A certificate that expired mid-project. The contractor was insured on day one and not on the day someone was hurt. Certificates need to run through the end of the work.
• The 1099 handyman. A person the association pays directly and directs on the job is usually an employee under the law, whatever the invoice says.
• The audit. Payments to individuals show up at the year-end audit and are charged as payroll. That is the policy working as designed, not a mistake.

Before your next renewal, check that

Tap or click a box to tick it off as you walk. The boxes reset when the page is reloaded, so print the PDF at the end if you want a record.

• Every contractor gives the association a certificate of insurance showing workers’ compensation before starting work.
• Certificates are checked for coverage dates that run through the end of the project.
• Volunteers are kept to oversight, and licensed, insured contractors do the physical work.
• Anyone the association pays directly is reported at the annual payroll audit.
• The association’s own policy is in force and listed on the coverage summary.

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