Unlike most businesses, HOAs are typically supported by the hard work and commitment of a team of volunteers working together to improve their community. This display of self-sacrifice and camaraderie is heartwarming—and it will save an HOA money at first—but volunteerism doesn’t come without a price.
Relying on volunteers puts HOAs at considerable financial risk. The Volunteer Protection Act of 1997 was passed specifically to protect volunteers from personal liability. In most cases, damages they cause cannot be held against them as long as they acted within “the scope of their responsibilities.” This law was intended to prevent citizens from shying away from volunteerism due to the fear of personal lawsuits. The end result is nonprofits, like HOAs, being held responsible for many unauthorized or negligent volunteer actions.
The following three types of insurance were originally designed to protect companies with paid employees. Your HOA may have one or more of these policies already, but shopping “off the rack” for this kind of insurance is dangerous if you have a formal or informal staff of volunteers. Be sure to work with an insurance company that understands the nature of the HOA business so your agent can customize these three policies to cover your volunteer liabilities.
1. Crime & Fidelity Bonds for HOAs
Crime & Fidelity bonds are meant to protect companies from dishonest paid employee actions. HOAs must ensure their unpaid volunteers are also covered for the costs associated with crimes such as embezzlement, check fraud, vendor fraud, forgery, and other means of theft.
2. D&O Liability for HOAs
Directors & Officers Liability insurance protects the HOA from lawsuits against its board, which is usually comprised of volunteers. Common lawsuits filed against HOA boards include breach of fiduciary duty, breach of contract, discrimination, harassment, negligence, wrongful foreclosure, and misuse of funds.
3. Workers’ Comp for HOAs
Generic worker’s comp insurance does not cover unpaid staff. Imagine you have a volunteer landscaping team to help elderly residents, or perhaps you have a group of parents who want to run a holiday party for the community. In cases like these, good intentions can quickly turn into a lawsuit when a volunteer is injured.
Don’t be caught without insurance coverage for your HOA volunteers.
The very nature of volunteerism makes customized insurance policies vital for every HOA. Volunteers are not typically trained in safety protocols as a paid employee would be. They may not understand the scope of their responsibilities, or they may end up performing unauthorized or negligent acts. They may not perform work to the same level of competency or quality of a paid employee. For all of these reasons and more, it is critical that every HOA re-examine its insurance coverage with an agent specializing in the HOA industry.
All Access Insurance does not provide coverage for volunteers. Only in the situations below:
The Colorado Workers' Compensation Act provides coverage for statutory volunteers and emergency service volunteers pursuant to 8-40-202 (1)(a)(1)(A)C.R.S.
Statutory volunteers and emergency service volunteers are defined as:
Volunteer Ambulance Teams or Groups and drivers
Volunteer Disaster Teams
Any person ordered by the chief or a designee of the chief's at the scene of an emergency or during the period of an emergency to become a member of that department for the duration of an emergency, and to perform the duties of a firefighter
Only if the person reports any claim within ten days of the cessation of the emergency
Volunteer Police Officers
Members of volunteer policy departments, reserves, police teams performing actual duties as a volunteer policy officer
Volunteer rescue teams or groups
Members of the civil air patrol, Colorado wing while performing duties as volunteer firefighter, search and rescue, ambulance
Persons called to serve on a posse
Keeping you protected.
All Access Insurance in Littleton, CO, who represents multiple insurance companies as a “Broker” and provides products for auto, home, commercial, workers compensation, and much more! Call us today for a free quote at (303) 932-1700.