Homeowner Associations » Workers' Compensation

Workers' Compensation FAQs


Question: Does my HOA need to maintain WC coverage?

Answer: California Law requires ALL employers to maintain Workers’ Compensation insurance California Labor Code, Section 3600 (a). Furthermore, nearly every set of CC&Rs requires a Board of a common interest development to purchase Workers’ Compensation coverage “to the extent necessary to comply with applicable law.”

If the association hires a contractor who does not carry Workers’ Compensation insurance, even if the contractor misrepresented that fact, the association becomes the employer as far as injury is concerned.


Question: But, wouldn’t an injured worker be covered under the Association’s general liability policy?

Answer: No, all general liability policies covering community associations contain specific language excluding coverage for “any obligation” of the Association “under a Workers’ Compensation (sic) law.” (ISO Language – 1992 – CG 00 01 10 93)


Question: If the Board is sued by the homeowners for failing to purchase coverage, wouldn’t the Board have coverage under their Directors and Officers Liability policy?

Answer: Again, the answer is no, but this is a common trap. Directors and Officers policies, like General Liability policies are not intended to act as a catchall for liability purposes. As such, all Directors and Officers policies contain language specifically excluding any claim, “arising out of, directly or indirectly resulting from or in consequence of or in anyway involving” bodily injury or sickness – whether workplace related or not.


Question: What Happens to an Employer Who Does Not Purchase Workers' Compensation Insurance?

Answer: Employers who fail to purchase Workers' Compensation insurance are in violation of the California Labor Code. The Director of the Department of Industrial Relations has the authority to issue a stop order against any company who is discovered to be unlawfully uninsured for Workers' Compensation. A stop order closes down business operations until Workers' Compensation insurance is secured. Besides issuing a stop order, the Director can assess fines based on whether a company has been discovered to be unlawfully uninsured through normal investigation or through the filing of an injured workers claim with the Uninsured Employers Fund. Failure to comply with a stop order can result in a $10,000 fine, while the fine for failure to carry Workers Compensation insurance is $1,000 per employee. Employers can be prosecuted for insurance fraud for willful failure to secure Workers' Compensation insurance as prescribed by law. Also, if Workers Compensation is not purchased, an employer opens himself/herself up to liability lawsuits from injured employees. Exclusive remedy protection does not apply if Workers' Compensation insurance is not in force at the time of employee injury.


Question: Should I report every work related injury no matter how minor?

Answer: As of January 2003, California law requires doctors to report employee injuries to the employer’s Workers’ Compensation insurer regardless of the size or scope of the injury. The good news is that First Aid injuries will not appear on your loss run or affect your premium. Even if you pay the employee’s First Aid treatment yourself and there’s a full recovery you should still report the claim. It will give your insurer a factual record of the injury that can protect your HOA from future litigation.


Question: How do I report injury?

Answer: Download & print the Workers' Comp Loss Form (DWC 1). Fill out the form as per the directions. Retain a copy for your records. Give a completed copy to the injured worker. Submit the form to your Workers’ Compensation Carrier as per the information included in the policy and carbon copy us. If you do not have information in your policy about where to submit, then submit directly to our office and we will connect you with the appropriate party. Our contact information is as follows:

Timothy Cline Insurance Agency, Inc.
Attn: Claims Department
725 Arizona Avenue, Suite 100
Santa Monica,California 90401-1713

Fax: (800) 736-3830


Question: What if the employee refuses to see a doctor?

Answer: Make sure you report the injury to your Workers’ Compensation carrier regardless of whether or not the employee opts for medical attention. If they do refuse treatment, make sure you document that treatment was offered & refused.


Question: My HOA didn’t file any WC Claims last year. Why does our premium continue to rise?

Answer: It’s important to keep in mind that as the cost of health care rises, so will the cost of Workers’ Compensation premiums. A person isn’t necessarily entitled to the health care prices from 1985 just because they haven’t been ill since that time.

Other factors include the economy, fraudulent claims, and evolving workplace hazards such as asbestos, carpal tunnel and terrorism.


Question: How do I keep my premiums as low as possible?

Answer: Prevention, prevention, prevention. Promoting a safe work environment is the best way to prevent the possibility of injury. Take a look around the work place take notice of any potentials for injury such as a crack in the sidewalk or exposed wiring. If any tools are required to do the job, ensure they are in a proper working order. Most importantly, take time with your employees to make sure they are aware of the proper safety procedures required to perform their duties.

Whenever possible try to provide your employees with an ergonomic work environment as well. Remember, injuries can occur as the result of a specific accident as much as they can be the result of a series of activities which wear down on the body or mind over a period of time.

Since the majority of employees for a homeowners association consist of groundskeepers, this link offers helpful preventative suggestions for keeping on the job injuries as low as possible. Groundskeeping Safety Tips


Question: My HOA already paid the premium for the Workers' Compensation policy at the beginning of the policy term. Why did we just receive another invoice? Do we have to pay it?

Answer: The most likely cause of the most recent invoice is the result of information your association provided during the most recent audit. Your Workers’ Compensation carrier has the right conduct a payroll audit throughout the policy term. If the results of the audit show more employees or a higher payroll than the association originally mentioned the carrier will submit a follow-up invoice for the difference. And yes, you are required to pay. Failure to pay in a timely manner may result in cancellation of the policy.

By the same token, if the association’s audit reveals less employees or a smaller payroll than originally intended a premium decrease will occur leading to a credit to the association. Increases & decreases depend entirely on the accuracy of the information submitted to the carrier at the time of binding. If the association experiences payroll as projected from the beginning the policy will neither increase or decrease.


Question: I noticed that our Workers’ Compensation policy actually consists of two coverages, Workers’ Compensation and Employer’s Liability. What is the difference between these two coverages?

Answer: Employer’s Liability is actually part II of most Workers’ Compensation policies. While Workers’ Compensation (Part I) is designed to protect the employee by providing for medical expenses, a percentage of pre-injury salary, vocational rehabilitation and Return to Work Assistance, it does not by itself provide any protection to the employer from liability for negligence or failure to maintain a safe work environment. This is where employers’ liability coverage comes into play.

Take, for example, an employee slipping and falling because a section of the floor was wet. The first part of the Workers’ Compensation policy would take care of their medical bills, but Part II would protect the employer for negligently allowing that spot on the floor to be wet.

While it is designed to protect against negligence or failure on the part of the employer it is not designed to encourage it. The policy will exclude any intentional negligence or failure. Employers’ liability is not meant to be a safety net against providing a safe working environment. If the employer had been warned about the wet floor condition, but did nothing to correct the problem they would not be covered under Part II of the Workers’ Compensation policy.


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