Workers Compensation Insurance 101: A Must for ALL Landlords!

What is Workers’ Compensation and Why It is a Must for All Rental Property Owners?

Workers’ compensation insurance provides coverage for employees in the event they get hurt while working “on the job.” An employee, for worker’s compensation purposes, is anyone preforming services on your property or on your behalf that does not carry their own insurance coverage.

Resident managers are considered your employees, for the W.C.I.R.B. (The Workers’ Compensation Insurance Rating Bureau). A Workers’ Compensation policy will also provide coverage for employees who develop occupational diseases in addition to covering injuries. The coverage provides for medical expenses, partial wages, and even retraining costs for an employee.

Workers’ Compensation insurance is mandatory insurance required under California Law. Employers will be required to carry this coverage when they have at least one employee, full or part-time, including resident managers. Fines for failure to secure Workers’ Compensation insurance start at $10,000 per employee, if an employee is injured and you do not carry Workers’ Compensation insurance coverage.

Many rental property owners unknowingly hire so-called “outside contractors” or “day workers” that do not carry insurance coverage and that, according to California’s employment laws, may be considered to be your employees under state law. Mis categorizing these workers such as maintenance personnel, handymen, etc. can result in significant liability should one of them become injured while “on the job” working for you. Faced with what could potentially be hundreds of thousands of dollars should one of these workers become injured, you might have wished that you had categorized these “independent” workers as employees, paid some of the required payroll taxes, and obtained Workers Compensation insurance.

The Apartment Association of Greater Los Angeles has developed a member benefit program offering discounted Workers’ Compensation coverage. Under this program, members are offered an exclusive, discounted premium and a minimum premium of $750, while the State Compensation Insurance Fund minimum premium is $1,300 and the state’s rates approximately 35%-40% higher than the Apartment Association’s Workers’ Compensation Insurance Program.

Who Can be Excluded From Workers’ Compensate Insurance Coverage?

Sole proprietorships, trusts and independent owners are not required to carry Workers’ Compensation insurance coverage on themselves (but they are required to carry the insurance for employees). Corporate officers, limited liability corporations, and limited partnerships can elect to be excluded from the Workers’ Compensation insurance policy, but only if certain requirements are met. Family members living at home and under 18 are also eligible to be excluded. However, relatives can NOT be excluded from the policy.

How is the Premium Calculated?

The premium on a Workers’ Compensation insurance policy is calculated based on wages paid or remuneration of rents (e.g., free, or discounted value of rents for an on-site property manager). The calculation is based of a rate assigned to each working-class code. Most employees of members of the Apartment Association of Greater Los Angeles fall into one of three working-class codes:

• 9011 – Onsite labor and resident managers, rates of approximately 7.22 per $100 of payroll.
• 8740 – Offsite supervisors, rates of approximately 1.82 per $100 of payroll.
• 8810 – Clerical office employees, rated of approximately $0.61 per $100 of payroll.

Credits may be available depending upon the size of the account, claims history, safety factors and protocols, and membership in the Apartment Association of Greater Los Angeles. Pricing could be unfavorably impacted; however, and be subject to surcharge, where there is poor history of claims. Every Workers’ Compensation insurance policy is subject to an annual audit to verify the actual payroll and to ensure class codes were reported correctly.

James Coady is the owner of The Coady Insurance Agency. The Coady Insurance Agency is an Independent insurance agency representing a wide client base and a variety of insurance lines and carriers. The Coady Insurance Agency has served members of the Apartment Association of Greater Los Angeles for over 25 years. As an independent insurance agent, The Coady Insurance Agency gives you the ability to choose the best carrier for your insurance needs. Call The Coady Insurance Agency today to obtain a free assessment of your insurance needs with a choice of which package fits you best. For more information, contact James Coady at (562) 400-6839 or by email at coadyinsurance1@att.net. Executive Director, Daniel Yukelson, recommends Jams Coady for your insurance needs.