Are They Covered? Condos Need to Double-Check Vendor Insurance

Mistakes happen. It’s a simple fact of life and a simple fact of doing business. That’s why issues of insurance are so important for condominium managers and boards to take seriously. While it is easy enough to keep up to date on one’s own insurance, making sure the coverage of outside vendors and contractors is in order can be trickier. We all want to believe that our landscapers or snow removal teams or siding contractors are protected by insurance in the event of an accident, but it’s not always easy to be sure. And if coverage is not in place, that’s the kind of mistake that can lead to million-dollar problems for an association.

"You're always liable when you engage in any commerce or do anything," saysDavid J. Byrne of the Lawrenceville-based law firm of Stark & Stark."There's no way to avoid liability—that's the way life is. The condominium has a leaking roof and hires a contractor to fix it, and the contractor drops a piece of equipment on an owner's head, the condominium can get sued for that. It probably would win but it would still have potential for liability for some reason—what occurred, what the condo didn't do, what the association should have done, etc. etc."

As with anything, good planning and due diligence can prevent many of those mistakes before they happen. Knowing what to look for and what questions to ask when it comes to insurance and vendors can ensure a smoothand liability-friendlyworking relationship.

Due Diligence

That diligence should start at the beginning. “You should not accept [an insurance]certificate that is handed to you by the contractor, because they can falsify those,” says Ann Hickman, a senior research analyst and editor of Construction Risk Management at the International Risk Management Institute, Inc., in Dallas, Texas. “What you should do is require to have it be sent to you from their insurance agent and have your name on it as a certificate holder. The agent who signs it is testifying these coverages are in force, as of the date that it’s issued,” she says.

According to Alex M. Seaman, senior vice president of Hub International Northeast, “The best place to start is with a certificate of insurance, which is standard procedure. Every contractor will know exactly what you are requesting. The certificate should include as additional insureds the co-op or condo association, the managing agent, and if work is being done in an individual unit, the owner of that unit. Typically, we recommend that this certificate of insurance be forwarded to the insurance professional on that building to review to make sure that the carriers and limits are adequate and dates are current.”

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