Every association should carry a workers’ compensation policy – whether the association has employees or not.  If your association issues 1099’s to contractors, then you can be held liable for injuries or liability from an uninsured contractor.  Workers Compensation Insurance – Connie Phillips Insurance (

While the general liability policy does provide coverage for “bodily injury”, it EXCLUDES “bodily injury to an employee” or volunteer.  A serious injury to a volunteer of the association or employee of a contractor (that the labor commission rules is an “employee” of the association) would be excluded by your general liability carrier.

The workers’ compensation policy should also include a Voluntary Compensation (VC) endorsement.  This endorsement provides coverage for the protection of the volunteer.


The policy will offer protection for the following exposures:

1)         An employee of an uninsured contractor is injured while on association property and the contractor has not provided proper coverage. The association may be required by the local labor/industrial authorities to step in as the “employer” as it relates to benefits owed that injured employee.

2)         A volunteer working on behalf of the association is injured during the course of their official duties. The association should and ultimately may be required to treat that injury as “work-related” thereby requiring benefits owed under the labor code.  The voluntary compensation coverage treats injuries to an injured volunteer (working in an official capacity), as a work-related injury and provides first dollar coverage for that injury – not excess of personal medical insurance carried by the volunteer.

Before hiring a contractor for your association, be sure to ask for proof of insurance.  You should attempt to weed out less responsible contractors who may put their workers and customers at risk by not meeting minimum standards of coverage for injuries.  Not having the proper insurance in place, could involve your association in a lawsuit resulting from a general liability claim or a worker’s injury.

The courts are holding the insurance carriers responsible for any injuries on your property where the contractor has no Workers Compensation or General Liability insurance in force.  Therefore, if your insurance carrier has to pay the claim, they have the right to charge you a premium under the policy.  When the final audit is done, the insurance carrier will charge you a premium for any uninsured contractors.  The only way to avoid this premium charge is to obtain a certificate of insurance for both workers compensation and general liability.

Require the contractor to provide you with a Certificate of Insurance providing:

  • General liability insurance – recommended minimum limit of $1,000,000
  • Additional insured endorsement naming the association and management company as additional insured. Be sure this is included on the certificate
  • Workers compensation insurance

It is also recommended that you check:

  • Verification of any required contractor’s license
  • Verification of contractors’ fidelity bond for protection against theft of items
  • Have a signed contract with all contractors that will include a hold harmless clause that protects and indemnifies the association and management company and reflects an additional insured endorsement.   A sample “hold harmless agreement” is shown below and should be reviewed by your legal counsel.
  • These requirements should be part of your established business practices to protect the association and maintained for a minimum of 3 years following the job completion.



To the fullest extent permitted by law, _______________________________________, (“Contractor”), agrees at its own cost to defend, indemnify, and hold harmless __________________________________, (“Association”), its officers, directors, shareholders, agents, representatives, managers, employees, and affiliates from and against any and all claims, suits, liens, judgements, damages, losses, and expenses including reasonable attorney fees and legal expenses and costs arising in whole or in part and in any manner from the acts, omissions, breach, or default of Contractor, in connection with the performance of any work by Contractor, its officers, directors, agents, employees and subcontractors. This agreement is continuous until terminated by either party with written notice.  Hold Harmless Agreement | Insurance Glossary Definition |


Check your directors and officers (D&O) liability application as well.  Most applications will require the association to maintain proper certificates of insurance reflecting the additional insured endorsement and have a hold harmless contract signed in favor of the association.

The certificate of insurance (COI) only provides the basics about the contractors’ insurance coverage, but offers reassurance to the association, that the contractor is insured on the date the certificate is issued.  As an additional insured, check to see if you will be notified in the event the policy is cancelled.

Take these necessary steps to keep your Associations financial future safe.