Worker’s Compensation insurance acts as a barrier to protect the Association in the event a contractor is injured or killed while working for the Association. It defers or deflects any lawsuit to the Worker’s Compensation carrier instead of the Association’s insurance policy. It requires the Worker’s Compensation carrier to absorb the cost for any attorney’s fees and generally (not in every case) removes personal liability from the Association. It also pays for medical expenses and lost wages for the injured party.

Many smaller contractors will tell you they are exempted by the State and not required to carry Worker’s Compensation insurance. In some cases that is correct, however, all that means to your Association is that you haven’t violated any state statutes by hiring an exempted contractor. By doing so, the Association is left unprotected, subject to suit and subject to personal liability as outlined above. Just because the State does not require the smaller contractors to carry Worker’s Compensation insurance doesn’t mean the Association can’t require it of them for their own protection and peace of mind.

When addressing the issue of Worker’s Compensation insurance with the smaller contractors, they will generally offer to sign a waiver giving up their rights to sue the Association in the event of a work related injury. Waivers are considered in the legal community to be unenforceable and therefore not an adequate tool to protect the Association. Additionally, any waiver signed by an uninsured contractor does not and cannot waive the rights of anyone other than himself. That means that his wife or child, etc. could still sue the Association in the unlikely event that the waiver was upheld.

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