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Why Both Vendors and Contractors Need Workers Compensation Insurance

By Richard Beskin, President, Beskin & Associates

Condominium and Homeowner Associations should ensure that contractors and sub-contractors have Workers Compensation Insurance … and have their own policy as well.

A very confusing and complicated aspect of insurance law has to do with injuries sustained by sub-contractors. At the time of an injury, are they your “employee” and therefore entitled to benefits under your Virginia Workers Compensation policy?

Virginia law states that at the time of an occurrence, an employer with three or more employees (no distinction between full time and/or part time employee) is required to have Workers Compensation Insurance in effect. Failure to do so triggers many adverse consequences for the uninsured employer and the “general contractor” employee (the sub-contractors).

Virginia law states that a “general contractor” (in which status an association could find itself) is responsible to compensate the injuries of any employee of any uninsured employer.




Example: an association hires a paint contractor (which does not have workers compensation insurance in effect) and at the time of a loss, has three helpers, one of which has fallen off a ladder while working at the association. The association may be determined in this case to be the general contractor and, therefore, be required to step into the shoes as the injured employee’s (uninsured) employer and pay the benefits that are required to be paid and/or incur legal action that may not otherwise be covered under the association’s general liability policy.

If an association has any employees of its own, the association should buy its own worker’s compensation policy. A minimum premium policy of several hundred dollars per year will supply the necessary coverage.

Always require a certificate of insurance from any vendor before they start a job, specifying that Workers Compensation Insurance is in effect.