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 | FALL 2016