CAI-NJ June 2022 Community Trends

FAQS INSURANCE... from page 34.

regarding responsibility. For insurance, the association may be responsible to insure parts of the building and unit that the owner “owns” and is responsible to maintain. The owner may be respon sible to maintain part of the building the association is responsible to insure. This is where confusion can set in when it comes to an uninsured claim. It is important to work with your community managers and your insurance profes sional to understand your coverages and responsibilities. Q: Why does the association need Workers Compensation (“WC”) insurance when we do not have any employees? A: Maybe this one should have been first on this list because without a doubt it is one of the top ques tions I am asked. If there are no

employees, the association should still carry a minimum premium Workers Compensation policy for several rea sons. Corporations in New Jersey are required to carry WC, even nonprof its, and in the governing documents under insurance requirements it is usually noted “Workers Compensation — as required by law.” Also, even though your community may be doing their due diligence, and requiring contractors to provide valid certificates of insurance, Sole Proprietors in NJ are not required to “opt-in” personally on their own WC policies. Therefore, there may be instances when a contractor is hired to do work for a community and pro vides a certificate of insurance, how ever the owner is not covered on that WC policy even though that owner may be engaging in performing the work along with their employees. If that owner is injured on your site while preforming work, they may be deemed by the WC court to be an employee of the association. The WC policy would step in to provide the coverage if needed. There have also been incidents where certificates of insurance that have been provided to a community have lapsed or expired and the contractor’s insurance is not enforced. It is a great safeguard for the community to have a minimum premium WC policy, even if there are no direct employees. This last question I was just recent ly asked twice this week alone. Ironically, I was in the middle of authoring this article and was told by someone, “You should write an article” about this topic. Luckily, it turns out I was already working on it, so here is the last most common question: CONT I NU E S ON PAGE 57

If ALL three of these are not met, then the insurance policy is not going to pay for the damages. The most common reason a claim is not paid is that it turns out to be a maintenance issue, not an insurable event. If there is no insurance, that does not mean that no one is responsible to repair the damage. In these situations, you will need to refer to your governing documents to under stand who is going to be responsible for the maintenance and determine who is responsible for the cost of repairs. In the governing documents there are three different definitions that are important, the ownership definition, maintenance definition, and the insurance definition. The important thing to point out is that they do not always track the same

Have your community association board members changed since last year?

Be sure to update your board’s member names, titles (President, Vice President, Treasurer, Secretary, and Board Member), and contact information to ensure your board members receive all the latest CAI member benefits!

Update today: ONLINE at www.caionline.org EMAIL addresschanges@caionline.org

MAIL to CAI, P.O. Box 34793, Alexandria, VA 22334-0793

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