It is Necessary to Survive

Workers’ Compensation Coverage is like Blood to the Body . . . It is Necessary to Survive!

Workers’ compensation insurance is a type of insurance that provides wage replacement and medical benefits to employees who injure themselves while on the job. In exchange, the employees waive their right to sue their employer for their injuries. Not all community associations have employees. They usually just have volunteers and maybe a management agent, so they incorrectly assume that they don’t need workers’ compensation insurance. However, that could be a costly mistake. Community associations often contract with vendors who do have employees who can get injured while performing their jobs on the community associations’ property. A vendor’s employees can sue the community association for the injury, especially if the vendor does not have proper workers’ compensation insurance. Moreover, community associations also mistakenly assume that workers’ compensation insurance only applies to paid employees. However, it can apply to volunteers as well; this includes board members and committee members. Imagine, for example, a board volunteer is walking the neighborhood to do architectural inspections, trips and falls and breaks their arm. The board member’s injury would be covered if the community association has the proper workers’ compensation coverage. Every community association should have sufficient workers’ compensation insurance to protect itself from liability and should make sure that any vendors it engages have proper licensing and insurance, including workers’ compensation insurance. If not, depending on the jurisdiction the vendor’s employee could be considered an employee of the community association and the liability for the employee’s injury transferred to the community association. This is why the community association should have workers’ compensation insurance to protect itself. Any contracts with a vendor should always include the requirement for the vendor to provide the community association with a certificate of insurance evidencing that it carries the proper insurance, as well as proof that it is properly licensed and will indemnify the community association. In addition, the association should maintain its own workers’ compensation insurance to cover liability if any of its vendors are not properly insured and to cover its volunteers. The community association should also always consult with its attorney and insurance professional.

Below is a breakdown of what community associations need to know about workers’ compensation insurance.

When an injury occurs while an employee is “on the job,” it “falls” (pun intended) under workers’ compensation coverage. What does that mean? Let’s go over the basics of this coverage.

1 Workers’ compensation versus medical benefits

Workers’ Compensation Insurance Health Insurance

A business insurance that pays for an employee’s medical and DC: 66-2/3 % VA: 66-2/3 % MD: two-thirds for lost wages due to an injury or illness that occurs while performing work-related activities. This can include activities in the office, while at client meetings, running errands, etc. Workers’ compensation insurance is regulated by the state and employers are often mandated to provide the coverage based on the number of employees. Health insurance is a benefit provided by an employer, retirement medical or individual for any non, workplacerelated injury or illness.

2 Workers’ compensation coverage is required for employer groups as follows

MD and DC One (1) or more employees

VA

Two (2) or more employees

Employee benefits (Part A) covers medical and rehab expenses, lost wages and in the case of death, final benefits to the family.

Employer liability (Part B) covers the employer’s defense, plus any monies awarded to the employee should the employee file a lawsuit.

Employer liability limits (DC, MD, VA)

No limits and no exclusions. Insurance carrier will pay out claim. Claims cannot be declined or denied unless the employer provides proof of fraud. The respective state may set a limit on amounts paid out for lost wages.

This portion of the policy does have maximum amount the policy will pay out, which the employer can choose when purchasing the coverage.

Recommended Limits:

 $500,000 per occurrence for bodily injury or illness  $500,000 per employee for bodily injury or illness by occupational disease  $500,000 policy limit for bodily injuries or illness by disease

4 Workers’ compensation covers

A. Medical bills for injured employee. B. Lost wages, 66 2/3 % or two-thirds of injured employee’s average weekly wage. C. Ongoing care, such as physical therapy, for injured employee. D. If an employee loses their life on the job, workers’ compensation can pay final benefits to their family. E. If an injured employee files an Employers Liability related lawsuit against your business, your workers’ compensation insurance has employer’s liability coverage which might help pay attorney fees, court costs and settlements. Please read your workers’ compensation for specifics on how it will respond.

Employment related practices lawsuits are not covered under a

Workers Compensation policy. 5 Employer should require prompt completion of an incident report by injured employee after a work-related injury.

6 Employer should file claim with the carrier promptly after injury is reported.

7 Returning to work is critical in reducing the impact of the claim and helping the organization’s experience modification factor.

An experience modifier or experience modification is an adjustment of an employer’s premium for workers’ compensation coverage based on the losses the insurer has experienced from that employer.

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This can mean placing the injured employee in a different role (roofing work versus answering telephone) temporarily. The employee could be working while continuing treatments. This gets the employee back to work sooner and helps the experience modification rating.

8 Claims remain on the National Council of

Compensation Insurance’s (“NCCI”) record for three (3) years, longer if not closed out—

CLOSE THEM ASAP.

NCCI is a U.S. rating and data collection bureau specializing in workers’ compensation. Simply put, they analyze the claim trends and likelihood of claims.

9 The premium for workers’ compensation insurance is predicated on payroll, classification, and the Standard Industrial

Classification (“SIC”) System code.

Workers’ compensation is an auditable coverage—maintain accurate records! At the expiration of the policy the insurance carrier will audit the payroll of employees and any independent contractors working on behalf of the organization.

10 Ensure vendors you work with have adequate workers’ compensation coverages and require proof of coverage (Certificate of Insurance).

Be sure any vendor you use has been properly vetted and carries the appropriate coverage. You should have a signed disclaimer from all vendors. That way, if a vendor is injured while working at your premises, you have a signed disclaimer holding you harmless since the injured vendor should be covered under their policy.

Vendors: it is equally important that you add (via endorsement) states, beyond your home state, any states in which you conduct your services. In other words, if you are an HVAC company based in VA, and you are servicing associations located in MD, be sure you include MD on an endorsement page. This can be done on an “If Any” basis with little to no charge other than minimum state fees

11 Consider the impact of working remotely on workers’ compensation coverage. A. Employees working remotely still qualify for workers’ compensation. For example, an employee, working from home, trips and falls on a carpet when going to pick up a document from a printer used at home for work-related activities. Every organization with remote workers needs workers’ compensation coverage that includes specific clauses addressing remote work. Although the worker carries the burden of proof and will be required to submit sufficient evidence to prove the injury occurred during work duties, the employer needs to recognize that anything in an employee’s home could be interpreted as a workplace hazard, depending on the circumstances. B. It is important to note that workers’ compensation is state specific.

What happens if the employer is in MD, but the employee in this scenario is working remotely in VA when an injury occurs? This is when an insurance endorsement adding the State of VA is critical to get the claim covered. C. To protect workers and minimize risks, organizations should help their remote workers identify and eliminate risks in their remote workplace and they should clearly define what their workers’

duties entail and when (clarify work hours); how (equipment related) and those duties should be accomplished. D. Visit your state’s Employment Commission website and learn the requirements of a business in reporting, insuring, and alerting the state. E. You are required to post the state mandated workers compensation posting notices in a public place for access byf your employees.

REFERENCE MATERIALS Workers Compensation Insurance Requirements by State | Embroker OWC Employer brochure.pdf (dc.gov) Virginia Workers’ Compensation Commission MD WCC Questions and Answers for Employers about Maryland Workers’ Compensation (state.md.us)

Written by: Sami Satouri, RHU, ChHC President/Owner, Quest Insurance ssatouri@questinsurance.us 703-961-8886 & Judyann Lee Of Counsel with McMillan Metro, P.C. jlee@mcmillanmetro.com 301-251-1180 x 308