Imagine that your condominium association calls in a general contractor to do some renovation work on one of the buildings in your development. Or one of the unit owners calls in a contractor of his own to do some work on his kitchen or bathroom.
More than nine times out of 10, there won't be any problems. But what happens if something should happen, and one of the contractor's employees trips, falls and injures himself? Or if one of those employees has some sort of accident—and instead of suing the contractor, sues the condo/co-op board or homeowner's association?
These hypothetical situations show why just having a licensed contractor isn't enough. Experts generally agree that at the very least, contractors should have general liability insurance. They also need workers' compensation insurance for their employees, appropriate auto insurance for any cars or trucks they have, and property coverage for their equipment. to avoid lawsuits and other unpleasant situations, both for themselves and for the communities they work for.
While all licensed contractors are required by law to carry those various types of coverage, associations must do their due diligence to make sure that all contractors hired to work on their property adhere to the law.
This requirement can also affect individual shareholders and unit owners. In many condos and co-ops, when residents have work done in their own apartments, they have to notify the association, because the co-op or condo's insurance company has set a minimum insurance coverage that owner/shareholders' contractors must have. According to Doreen Benevento, vice president of the commercial insurance firm of Parks and Associates of Woodbridge, "What happens if an individual is working for a contractor, and he gets hurt, and he decides to sue not his employer, but the building? When these claims happen, they're usually six-figure claims."