Risk & Business Magazine Spectrum Insurance Fall 2016 | Page 30

VOLUNTEER EXPOSURE AND WORKERS’ COMPENSATION

V

OLUNTEERISM IS ON
THE RISE. HOW DO
YOU EVALUATE THIS
EXPOSURE WHEN
UNDERWRITING A

RISK?
By definition, a volunteer is a person
who donates his or 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 employees injured in the
course of employment in exchange
for mandatory relinquishment of the
employees’ rights to sue employers for
the tort of negligence. WC premiums
are based on payroll. If volunteers
receive no pay 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 intent of insurance
companies 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
workers’ compensation statute must
be carefully reviewed to determine
whether or not a volunteer is entitled
to WC benefits. In Pennsylvania
and Virginia, for instance, volunteer
firefighters are considered employees
and are eligible for WC benefits. In
other states, it must be determined

whether or not a volunteer is
considered an employee for WC
purposes. 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 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
straightforward 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

Coverage Corner:
30

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FALL 2016