Volunteer Labor in your HOA: Worth the Risk?

HOA Board members face a lot of decisions when it comes to finances. Usually those decisions involve trying to figure out how to be as responsible as possible to keep the HOA budgets in good shape. Sometimes, Boards will have the idea to rely on volunteer labor from community members for cleanup or maintenance projects as a way to save some money in the budget. After all, it can seem like a great way to save some cash while building a sense of camaraderie in the neighborhood. Before you jump to approve this idea at your next Board meeting, there are a few more things you should consider.

When Volunteer Labor Isn’t Cheap

On the surface, volunteer labor seems like a great idea because it’s essentially free when compared to hiring a contractor for cleanup or maintenance projects in the neighborhood. But it’s not always that simple. Here are a couple scenarios to think about:

  1. The common areas in your neighborhood need to be spruced up so your HOA Board organizes a community cleanup day with the help of volunteers from the neighborhood. During the event, a nice middle-aged man who has been a homeowner for several years’ volunteers to trim some low hanging tree branches while on a ladder. Something goes awry in the process and this man ends up accidentally falling off the ladder, sustaining a serious head injury, and spending weeks in the hospital to recover. To recoup the cost for medical bills and lost wages, he sues the HOA for tens of thousands of dollars and wins.
  2. To help save some money in the budget, your HOA Board appoints a few community members to help with the maintenance of common areas. While mowing the lawn, one of these volunteers accidentally passes over a large rock, which is projected toward the adjacent house and shatters the window. The shattered glass injures the resident who was just inside the home and they file a lawsuit for damages and for injuries totaling thousands of dollars.

Free labor? Not so much. Trying to save a little on labor now can end up costing a lot in the long run. Even though you might be saying, “Yeah, but that would never happen in our neighborhood,” the point is that it certainly could, and it has to many other HOAs in the past. Is it really worth the risk?

Covering Your Assets

When your HOA hires a licensed contractor for labor or maintenance jobs in your community, their workers are covered by their business insurance that essentially protects you from any lawsuits in the case of injuries or property damage. Volunteer labor isn’t always automatically covered in your HOA policy, which means your assets aren’t protected. Even if your HOA does have a general liability or worker’s compensation policy, there may be particular clauses that exclude volunteer labor or place it under certain restrictions. Many HOAs need to turn to standalone special volunteer policies that cover volunteer labor specifically for a yearly fee.

Whatever your insurance situation is, the most important element is to make sure your Board is informed. Find out:

  1. If your insurance policy covers volunteer labor and if any special processes are required by the Board to ensure that policy.
  2. If you need a special standalone policy to cover volunteer labor.
  3. How the costs of those insurance policies compare with the cost of just hiring a contractor and if there really are significant savings involved.
  4. Even if the cost savings are significant, if members in your community are qualified to do the type of quality work that you would get by hiring a licensed contractor.

Making the Final Call

Every HOA is different, and we realize there are a wide range of budgets and community dynamics that come with each unique community. When it comes to volunteer labor, there’s really no right or wrong choice. The only wrong choice you can make is not doing your due diligence to ensure that your HOA is protected so that free labor now doesn’t put you into debt later. If that doesn’t involve an insurance policy for your HOA Board, at least make sure you get volunteers to sign an official waiver that releases you from any financial obligation in the instance of injuries or damages.

Related: How to Deal With Excessive Noise in Your HOA

Volunteer labor is a great thing, but it’s not always the best choice for every HOA. We hope these tips have helped you take a closer look at what volunteer labor means for your community. Still have questions about volunteer labor or insurance policies that can make sure your HOA is protected? Contact Spectrum today to learn how we can help.