Volunteerism is on the rise. How do you handle injuries that occur?
By definition, a volunteer is a person who donates his/her time or efforts for a cause or organization without being paid. Workers Compensation (WC) is a form of insurance providing wage replacement and medical benefits to employeesinjured in the course of employment in exchange for mandatory relinquishment of the employee’s right to sue his or her employer for the tort of negligence. WC premium is based on payroll. If volunteers receive no payroll for their services, are they entitled to seek benefits under the workers compensation policies of organizations for which they volunteer? There is no easy answer to this complex question.
Quite simply, it is not the insurance company’s intent to provide WC coverage for volunteers.
Does the state allow coverage for volunteers? While “employees” are covered for WC, coverage for volunteers is not mandatory in most states. Each state’s statute must be carefully reviewed to determine whether or not a volunteer is entitled to WC benefits. In PA and VA, volunteer firefighters are considered employees and are eligible for WC benefits. In other states, it must be determined whether or not a volunteer can be considered an “employee” to qualify for WC benefits. With each state having different rules regarding volunteers, the underwriting of this exposure is challenging. Consequently, it is recommended that an Accident and Health policy to be considered to cover this potential gap in coverage.
When is a volunteer considered an “employee”? As stated previously, WC is meant to cover employers for “employees” who are injured while working. These employees are paid a wage. By definition, a volunteer is a person who provides services without the expectation of compensation of any kind. It all seems pretty straight forward until you consider the following:
- Compensation does not only mean a salary or hourly wages. In the case of a volunteer, compensation could mean any benefit in exchange for the services being provided, such as a living allowance, a discount not available to others, a stipend, gift certificates or even a credit. If a volunteer is receiving a benefit of any kind, some states will consider the individual an employee for the purpose of workers compensation benefits.
- If an organization is setting precise hours and treating the volunteer as an employee in every way except compensation, some states will consider the individual an employee for the purpose of workers compensation benefits.
Does the Voluntary Compensation and Employers Liability Coverage Endorsement cover volunteers? To qualify for coverage under the Voluntary Compensation endorsement, a worker must be an excluded employee as defined by each state’s WC law. As the name suggests, it is a coverage employers provide voluntarily and they choose to do it as a hedge against lawsuits by uninsured workers. For instance, most states exempt domestic workers, agricultural / farm workers, casual labor or seasonal workers from benefits under the law, but they still define them as employees. This endorsement is intended to provide WC benefits for these exempt employees. There are a few states that define volunteers as exempt employees and/or do allow them to be covered under this endorsement.
From a claims handling perspective, the amount of work that is needed to determine the compensability of a claim for a volunteer under an insured’s WC policy is significant. The adjuster will need to determine whether or not a volunteer in a given state can be considered an employee under that state’s statute and is eligible for coverage under WC or if he or she is excluded from coverage. In addition, for volunteers who work elsewhere where they are eligible for WC benefits, the carrier could be liable for those wages too (up to the maximum weekly WC rate) and be required to return the volunteer to work at his/her primary job. In addition, any claim paid for an injured volunteer will affect the insured’s experience modification.
An Accident and Health policy is a simple way to provide volunteers with added protection to meet their individual needs without increasing benefit costs. It can complement existing medical coverage and help narrow financial gaps in coverage caused by out-of-pocket expenses, such as deductibles, co-payments, and non-covered medical services. These policies usually pay the costs of emergency room services and follow-up treatment to pre-determined limits based upon the type of injury. Accident and Health policies will also cover volunteers as they commute between their homes and places of service, a benefit not typically found in GL or WC policies. Additional Accident and Health benefits include partial or total disability benefits and critical care benefits. These policies are often excess insurance, meaning that they pay only after other available insurance (generally the volunteer’s personal health insurance) is exhausted. If the volunteer is uninsured, the accident and injury policy would “drop down” and become primary coverage for the injury. Please keep in mind that Accident and Health insurance coverage varies by carrier and must be reviewed carefully.
Schools, churches, and social service types of organizations depend on volunteers for their continuing operations. It is imperative that they obtain an Accident and Health policy to cover this exposure upfront versus when coverage is potentially denied by an adjuster due to the statutes of a given state.
Please call us for more specifics as to Volunteer coverage and the benefits of a Volunteer Accident policy for your organization.
Reprinted with permission by Selective Insurance Company.