1099's: Are They Worth the Risk?

By Buddy Whitaker 

Published December 26, 2012


Naturally, it depends.  How high are your insurance limits?  From an insurance perspective there are not many upsides to having an independent handyman/woman around.


I posed the limits question earlier because they may be used to pay for damage your 1099 created.  If your handyman hasn't obtained a general liability policy, chances are the association's liability limits are going to be used to cover the accident.  The costs could become expensive especially if the issue has to go before a judge for ruling.  If he does carry a general liability policy, the association should make sure they are listed as an additional insured.  The association may be defended by the 1099's policy for bodily injury and property damage to others he/she created.


Does your 1099 carry worker's compensation?  Probably not since they don't fall under the state of Georgia worker's comp requirements.  If he does have a worker's comp policy, what is the association's protocol on making sure it stays in force?  Your 1099 could provide you a certificate showing coverage was in place one month and simply not pay the bill the next. 


So if he is changing a flood light and falls off the ladder, what happens?  If the accident is severe, the association will most likely be sued for damages and hospital bills.  The court will try to determine if the 1099 is in fact a 1099 or simply paid as a 1099.  There are many questions and answers that determine if a court views your 1099 as a true 1099 or as an employee.  I would consult a worker's compensation attorney for this information.  Just because they are paid as a 1099 doesn't mean the law considers them a 1099.  If the judge finds your 1099 is an employee, then the association will be subject to maintaining a safe work environment and a settlement will most likely be offered.  Long story short, your general liability policy will most likely end up paying for some or all of the damages and costs involved.


Your association runs a risk of either of the two scenarios occurring.  You will see the indirect affect to the condominium or homeowner's association when your insurance policies come up for renewal.  You may not be offered renewal by your current carrier.  Or the association's premium may increase significantly or both may occur.  Either way the association has invested time and now money into this issue that could have been covered by a policy that costs roughly $1,300 annually.


So do you think the association's 1099 is a good idea still?  I don't think the direct cost difference between a 1099 and a reputable vendor is that significant.  However, the indirect costs simply from an insurance standpoint will hopefully make you reconsider.


Make a great day!!


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Buddy Whitaker truly enjoys being an insurance professional. His condominium association client's appreciate his attention to detail. The fact that he has practically

committed the Georgia Condominium Act to memory helps. 

In his words, "My objective is to be the resource and trusted advisor that my clients want to turn to for guidance. I strive to either know the answer or know where to find it."

Creative Solutions: As a student of condo association (COA) insurance, Buddy has forged specialized programs that address the unique exposures of multi-family residential structures.

His solutions juggle the need to keep overall costs down, both for the unit owner and the association, while making sure that coverage remains as broad as possible.

COA Focused: He's leveraged his 6 years in the insurance industry; as the director of continuing education for Metro Alliance of Independent Insurance Agents, board position on his own condo association, and study of the Georgia Condo Act and condo declarations.  This transitioned into understanding of the COA sector, the nature of the claims,  methods of managing the risk, and the complex relationships among board members, unit owners, and property managers.

Insurance isn't just a job for Buddy, it is a passion.  That said, he also enjoys a round of golf, experimenting in the kitchen, and DIY projects around his home. He's also a loving husband and a proud father of a brand new baby girl.

Contact Buddy via email or visit Hamby & Aloisio's website.