Although volunteers might not be paid, from a workers' compensation perspective they might be better called “workers.”
State laws vary widely on the insurability of volunteers under workers' compensation. Some states do not allow it, while others specify that certain types of volunteers must be covered and others may be covered at the option of the organization for which they volunteer.
But workers' compensation coverage can be expensive, especially for nonprofit organizations that depend on volunteers but whose budgets are tighter than ever before. As the weak economy translates to declining financial support and sharper competition for fewer available grants, nonprofits are looking for every way possible to reduce their expenses, including what they must pay for insurance.
One way agents and brokers can serve their nonprofit clients over the long haul is to help them identify the best options for insuring their unpaid workers—the volunteers who are such a valuable extension of the nonprofit's human resources.
In evaluating options, a number of factors can be considered. For example:
- How broad is each type of available coverage?
- What is the cost?
- What is the perceived value to the volunteer?
- What is the risk exposure, based on the work volunteers do for the organization?
Where workers' compensation coverage is available to volunteers, it can be tempting for the agent to recommend that option. With no-fault coverage and unlimited benefits, workers' compensation provides broad coverage, and many agents believe broader is always better.
But to a cost-sensitive nonprofit executive, broader coverage might have no value if the perceived risk of volunteer injury is low, and a lower-cost option might have considerable appeal. That is why accident medical insurance should be considered as an alternative way to protect volunteers, even if workers' compensation is available. Larger nonprofits have been able to reduce their insurance expense by several thousand dollars a year by choosing accident medical rather than workers' compensation. In this economic climate, that kind of cost savings can make the difference between keeping the organization's doors open and having to cease operations. And it can make the insurance professional a hero for helping the nonprofit or social services organization better use its resources.
The following chart shows a snapshot of the distinctions between workers' compensation and accident medical insurance. And these choices are different—this is a true “apples to oranges” comparison. But helping the client choose between apples and oranges is how a good agent serves his client's interest, becomes a trusted advisor, and increases his chances of keeping the client when other agents try to take away the business.
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